A HELOC or home equity line of credit is a type of loan wherein a banking company allows the borrower or debtor to borrow a maximum amount which depends on the bank. The collateral used in such loans is usually your home equity or the market value of your house.
Technically, there’s no problem with this since bank people are there to guide you. However, if you have a poor credit, you might find the following tips useful in order to have a HELOC loan.
Have a copy of your credit report
Knowing the fact that you have a bad credit is not enough. You should further determine how unfavorable your credit score is. You should also review your credit report and see if there are deceptions and inaccuracies that may be affecting your credit
You can petition such inaccuracies by contacting individual credit bureaus.
Make a monthly monetary report
Lenders usually pay less attention to borrowers who have bad credit. With that being said, chances are you can never get a home equity line of credit. To alleviate the dilemma, it’s a wise move to gather all your financial information and create a monthly monetary report. This report will show the lenders that, despite your bad credit, you’re still worth their efforts.
State in the report all facts about your investments, household income as well as the equity of the house you own.
Don’t settle with one lender
The next step is to apply for a HELOC finally. However, instead of settling with only one lender, it’s advisable to apply with two to three lenders. Provide each of them copies of your monthly monetary report as well as your credit report. Bear in mind that a monthly monetary report is not formal. It’s just an organized report showing your financial stability.
With that being said, you don’t have to fear about anything when it comes to such reports because technically, lenders won’t be too bothered, as well.
Have a further talk
Although you have already sent the essential documents, it’s still polite to talk to each of your lenders separately. Provide a further explanation about your bad credit and other supporting details about your financial stability.
Don’t forget to mention that your home equity is literally your house and not your spouse’s. It may be unnecessary to talk, but lenders often appreciate borrowers who exert extra efforts.
Compare and finalize
The last step is to compare the interest rates and terms of each lender. Determine which offer suites you best, and whether the interest rate is fixed or adjustable. You should also keep a close eye on extra fees as well as on the payment schedule.
Having a bad credit is not a good reason for you to be disabled from having loans. Nowadays, home equity line of credit is considered as the most common loan for those who have bad credits. By following these tips and by proving those lenders that you’re stable now, surely your HELOC will be granted.