Thursday, September 24, 2009
How to Get a Home Equity Loan while Having a Bad Credit Score
Written by Stefanie Marty
I found interesting articles on the web about what you have to pay attention to when looking for a home loan. You want to get the best terms for your loan and you also want to be able to borrow a high amount. But especially today, when the average personal debt is increasing, this is difficult to achieve and one might think that home equity loans for people with bad credit scores do not even exist.
It is true that the most important factor to consider when buying a house is your credit score. But having a bad credit score does not mean you will not be able to borrow for your home equity. To improve your chances to get good terms and a low interest rate on your loan, do everything you can to increase your credit score before applying for a loan. This can be achieved in different ways. Your credit score reflects amongst others whether you are paying your bills on time or not, how much you owe and how much credit you have, how long you have had your accounts for and whether you got new accounts or not. So you should take your time before applying for a loan and pay attention to these factors.
If you have a bad credit score there are two types of bad credit home loans you can get. The first type is a bad credit mortgages loan, the second type a home equity loan with bad credit. In the first case you want to buy a home and you have to pay a high annual interest rate in order to compensate the bank for the risk it is taking by borrowing you money. In the second case you already have a house with equity built in it, but you might need extra cash. In order to get this you take out loan which is referred to as home equity loan with bad credit.