Introduction
Regardless of the reason why you have a bad credit score, you should know that you can still qualify for a bad credit equity loan. The lenders of these loans understand that you did not set out to create the situation that you are in. They also realize that it affects everything you do – from purchasing a car to getting unsecured loans – and that you still want to pay off your debts, which is why you are not trying to get a bad credit equity loan.
Step 1
Go online in search of several legitimate lending institutions that specialize in providing people with a bad credit equity loan. Make a list of 4 or 5 lenders then compare the various interest rates that you qualify for. Take a look at each lender’s terms too.
Step 2
Determine just how much equity you actually have in your home. Remember that the mortgage loan has to be lower than your property’s value but enough that 80% of the difference between these 2 figures equates to more than $10,000. So, for instance, if your home is worth $120,000 but you have to pay $80,000 on your mortgage you will be able to get a $40,000 bad credit equity loan. Most lenders will underwrite a bad credit equity loan for up to 80% of your home’s equitable value. This means that you could possibly qualify for a $32,000 line of credit.
Step 3
Look for the best interest rates for your bad credit equity loan. Keep in mind that this interest rate will be dependent upon your credit score. This is not as important whenever you are getting a home equity loan though since your bank will use your home as your collateral. Keep in mind that if you don’t pay back your bad credit equity loan though the bank will foreclose on your home. However, if you find that the interest rate is too high you can always dispute things on your credit report so that some of your bad marks are removed before applying for a bad credit equity loan again in 60 days.
Step 4
If you get a home equity loan and you still need to improve upon your credit history, this can be a great time to work on creating a good repayment history and thus build up your credit score. Make sure that you view this loan as a way to get out of debt and rebuild your credit score, not as the opportunity to take vacations and buy luxury items. With this in mind, it is vital that you use this loan only to pay for things like past debts, medical bills or college tuition.
Step 5
These are only some of the tips that you can use whenever you’re searching for a bad credit equity loan. If you take a look around, you will be able to find other tips that you can also utilize here. Doing so will make the loan’s terms and conditions more palatable for you to accept and to be able to live with in the future as well.
Tips
If you are a homeowner and you have equity in your home, you can take out an equity line of credit on your home even if you have bad credit.
Sources and Citations
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