Improve Your Attractiveness as an Applicant
Before you apply for a bad credit home equity line, you will want to make sure you are as attractive a borrower as possible to lenders. Here are some tips on improving your chances of qualifying.
Take Some Time to Work on Your Credit
Although our lenders can likely find a bad credit home equity line for you regardless of your credit history, you may want to take a few months to improve your score if you have seriously damaged credit. You can do simple things like pay down credit card balances, pay on time consistently, and take care of unpaid bills. These small steps will help you maximize your credit score when you apply for a bad credit home equity line. Although you can qualify with bad credit, you will get a more favorable rate the better your credit is. Thus, it will behoove you to take some time to work on your credit, even if it’s still less-than-perfect when you finally apply.
Build up Your Equity
Credit reputation is only one factor that lenders will examine when you apply for a bad credit home equity line. One of the other factors they look at is collateral, or the amount of your credit line relative to the value of your home. You can increase the amount of your bad credit home equity line by building up more equity in your home. You can do this by paying down the principal of your home. You can also wait to apply for a bad credit home equity line until your home has appreciated in value. Most homes appreciate in value considerably over the course of a year, so you might take some time to let this appreciation work in favor of your equity.
Boost Your Capacity to Pay
The final factor lenders will take into consideration when you apply for a bad credit home equity line is your capacity to pay. This means what your income level is, how much debt you have, and what kind of cash reserves you have. You can increase your attractiveness as a borrower in this area by increasing your income, reducing your debt, and expanding your assets. Again, it will help your attractiveness in this category if you pay down the balances of your other debts before you apply for a bad credit home equity line.