How To Apply For a Home Equity Line Of Credit

Introduction

A home equity line of credit will offer you a lower interest rate than what you would get with an unsecured loan. Even if you have bad credit, this is the best type of loan to get because you are actually taking advantage of the equity within your own home. Of course, if you apply for and get this type of loan and then are able to keep your repayments up to date, you will actually be helping to improve your credit history. However, there are some things that you do need to know about applying for this type of loan.

Step 1

Before you apply for a home equity line of credit you should request a free copy of your credit report. Each of the three major credit unions (Equifax, Experian, TransUnion) is to provide you with one free credit report each year. You can easily and quickly go online and get this. Once you have it you should read over it very carefully in search of any errors as this may be responsible for your bad credit history. Make sure that you contact both the lender and the credit reporting bureaus to get these mistakes corrected prior to applying for a home equity line of credit.

Step 2

Apply for your home equity line of credit loan online. This is the easiest way for you to be able to compare various lenders to one another. It is also the most convenient way in which to fill out an application.

Step 3

There are comparison web sites available that will provide you with information based upon your estimated credit history. Of course, you don’t want to even attempt this before checking on and making any necessary corrections to your credit report first. You will then be able to very honestly state whether you have a good or bad credit history. The only other information that will be requested is the property’s description and location and your personal contact details. Make sure to give accurate answers to all of these things. Your details will then be compared with up to 4 lenders who suit your requirements. It is up to you to decide which home equity line of credit lender is best for you.

Step 4

Never apply to more than one home equity line of credit lender at a time. This is important because multiple applications for a home equity line of credit can make your credit worse. As such, you may end up not getting any home equity line of credit.

Step 5

Make sure that you carefully read any offers that you receive. You will want to pay special attention to the interest rates and fees. If you have a bad credit history, you should expect to get higher rates and costs. Regardless, it is important to remember that if your payments on your home equity line of credit loan are late or missed all together then your home will be at risk. This is definitely something that you don’t want to mess with. So, before you sign any contract you need to make sure that you are able to uphold your end of the deal.

Tips

If you have bad credit, check the Federal Trade Commission website for tips on how to deal with it.

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