A guide to getting a HELOC with 'bad' credit

Your credit score affects your ability to borrow your equity with a home equity line of credit. While there's officially no such thing as "bad" credit, it can be challenging for homeowners to qualify with a low credit score for a HELOC loan. Although Rocket Mortgage® currently doesn't offer HELOCs, we have helpful answers and tips that can help you make an informed borrowing decision.

Why would you want a HELOC with 'bad' credit?

If you have outstanding debts with high interest rates, your home requires a renovation or remodel, or you need to cover unexpected medical bills, a HELOC can be a convenient way to borrow money.

A HELOC allows you to borrow the equity you've built in your home. Home equity is the difference between your home's current fair market value and what you owe on it. Expressed as a percentage, it represents how much of your home you own.

When you take out a HELOC, your property is collateral. That allows lenders to charge a lower HELOC interest rate than you'd get with an unsecured loan, like a personal loan or a credit card.

You also only pay interest on what you borrow. That's one of the key differences between a HELOC and a home equity loan, in which you borrow a lump sum of money.

In these and other scenarios, a HELOC can be a valuable option.

What is the minimum credit score for a HELOC?

Each lender can set its own requirement for a credit score to get a HELOC. A standard minimum benchmark is 620, though you’ll stand a better chance of getting approved and qualifying for lower interest rates with a credit score of at least 680.

“There are exceptions, but lower scores usually come with stricter terms, higher rates, and smaller borrowing limits,” says Eric Chebil, founder and CEO of NestNavigate, a real estate education company in Los Angeles.

Can you get a HELOC with 'bad' credit?

Again, there is no official "bad" credit score. However, a FICO® credit score below 580 is considered poor credit and will make it difficult to quality for a HELOC.

Again, most lenders require a credit score of at least 620 to be eligible for a HELOC. However, qualifying with a fair credit score is possible.

“Although eligibility becomes more stringent and loan terms may be less advantageous, it’s possible to obtain a HELOC with bad credit,” says Dennis Shirshikov, a professor of economics and finance at City University of New York/Queens College. “Missed payments, high credit utilization, or a short credit history are frequently reflected in bad credit.”

The most common credit scoring model is the FICO® Score. Any credit score less than 580 is regarded as a poor FICO® score. A score at this level suggests a higher risk for lenders. Borrowers with a poor credit score will find it challenging to qualify for a HELOC and can expect to pay a higher interest rate if they qualify.

Here are the ranges for FICO® scores:

• Poor: Less than 580
• Fair: 580-669
• Good: 670-739
• Very good: 740-799
• Exceptional: 800 and above

VantageScore is another common credit scoring model. Here are the VantageScore ranges for credit scores:

• Subprime: 300‑600
• Near prime: 601‑660
• Prime: 661‑780
• Superprime: 781‑850

Reasons why a borrower may have a low credit score include bankruptcy, late or missed payments, high credit card balances, accounts in collections, and defaulting on loans.

What other factors do HELOC lenders consider?

HELOC lenders consider factors other than credit score, including:

• The home equity amount you have. When you have a HELOC, lenders require that you retain a minimum amount of equity in the house. This is usually around 15%, so ensure that the equity you can access is enough to accomplish your goals.
• An acceptable loan-to-value ratio. Lenders value this to make sure you have sufficient equity in your home to safely borrow against it.
• A low debt-to-income ratio. Having a lower ratio assures lenders that you can handle and afford the new HELOC loan payments in addition to your existing debts.
• Income and employment history. Stable earnings indicate that you can be relied upon to repay your HELOC debt over time.
• Reliable payment history. A solid track record of making punctual payments lowers your risk among lenders and improves your odds of getting HELOC approval.
• Recent adverse events on your credit report. Some items, such as a bankruptcy or foreclosure, are usually associated with a waiting period before you can be approved.

“Lenders may also look at your recent financial behavior, cash flow strength, and property value to assess your overall risk beyond credit score alone," Chebil says.

Is it a good idea to get a HELOC if you have 'bad' credit?

HELOCs can be attractive thanks to their flexibility regarding repayment and use of funds, as well as potential tax deductibility. Still, you should carefully consider the risks involved. These include:

• Risk of foreclosure, as the loan serves as a second mortgage
• Reduced borrowing power
• Less favorable HELOC terms
• Risk of ultimately owing more than the property is worth, a situation called negative equity.

If you have a low credit score, you might want to wait until it improves before applying for a HELOC. If you are approved for a HELOC with a low credit score, you’ll likely pay a higher interest rate. Taking time to improve your credit score could help you qualify for a lower interest rate, which will save you money.

If you can’t wait, consider other financing options. Even with a lower credit score, you may qualify for a personal loans or credit card. You'll likely pay a higher interest rate, but if you have a clear plan to pay off what you borrow, these options avoid the risk of using your home for collateral.

How to get a HELOC with 'bad' credit

Still determined to pursue a HELOC when you have a lower credit score? Follow these steps to improve your chances.

1. Check and improve your credit

If your credit score is lower than you'd like, you can take steps to repair it. While improving your credit score takes time, doing so can get you a lower interest rate on a HELOC. Below are some strategies to help you boost your score:

• Dispute inaccuracies on your credit report. Mistakes on your credit report often drag down your credit score. You can access your credit reports from the three primary credit bureaus for free at AnnualCreditReport.com. Carefully review your credit report for mistakes or errors and report any you find so they can be corrected.
• Commit to on-time payments. Your payment history accounts for 35% of your FICO score. Making on-time payments consistently helps improve your credit score.
• Pay down revolving debt. If you have a significant amount of credit card debt, make a plan to pay it off. Reducing your credit card debt affects your credit utilization rate, which can improve your credit score.

2. Consider other financial factors

It's a good idea to review your finances. Calculate your DTI ratio, add up your savings, and look at your overall financial health. “Fortunately, strong equity and reliable income can help compensate for a lower credit score,” Chebil says.

If your financial picture isn't ideal, consider finding a co-signer for your HELOC application. You also can prepare a letter of explanation for the lender that clarifies your current financial position.

3. Determine how much you can borrow

Next, figure out the maximum you can borrow by calculating your home’s accrued equity, which will determine your HELOC limit. Take the time to run the numbers for your situation.

4. Shop around for the right lender

Choosing the right lender can make a big difference. Some lenders are willing to work with borrowers who have less-than-ideal credit.

“Different lenders have different guidelines. Some are more flexible with lower credit scores,” Chebil says.

Beyond finding a lender willing to work with you, it’s helpful to explore the different interest rates and terms available across lenders. Locking in even a slightly lower interest rate can make a big difference to your finances. It’s worth the effort to shop around and ask questions about anything you don’t understand.

5. Gather the necessary documents

A HELOC is a second mortgage, which means you’ll need to document your finances during the application process. Be prepared to provide the following documentation:

• Government-issued photo ID
• Most recent pay stubs
• Tax returns for the past 2 years
• Recent bank statements
• Recent real estate appraisal
• Homeowners insurance policy
• Documents for existing debts
• Current mortgage information

6. Submit your HELOC application

After choosing a lender and gathering your documents, it’s time to submit your HELOC application. Be prepared to go back and forth with the lender. For instance, the lender may require additional information about your income or a new appraisal for your home. As you sort through the paperwork, quickly and thoroughly responding to any questions can make things go more smoothly.

Next, await an underwriting decision. You can expect notice of approval or denial within a few days to a few weeks.

HELOC alternatives if you have a low credit score

A HELOC isn’t the right solution for everyone. Below are some alternatives to consider.

• Home equity loan: A home equity loan lets you borrow a lump sum using your home as collateral.¹ The fixed monthly payments could be a more budget-friendly option for those seeking a cost-effective solution.
• Cash-out refinance: If you qualify for a cash-out refinance, you can borrow your equity and retain a single mortgage payment.²
• Personal loan: An unsecured personal loan requires no collateral, which means your home won’t be at risk if you default.
• Credit card: Credit cards offer another unsecured borrowing option. Most credit cards charge higher interest rates. You can save money by looking for a low-interest rate card or a promotional 0% APR offer and paying off what you borrow before it expires.
• Loan from family and friends: If you have family members or friends willing to lend you money at a better interest rate, that’s an opportunity to consider. But make sure to get everything in writing and stick to the terms to avoid putting an unnecessary strain on your relationships.

The bottom line: A HELOC can be possible with a lower credit score

A lower credit score doesn't automatically disqualify you from getting a HELOC, but it's important to understand what's required to get one before you apply. Rocket Mortgage does not currently offer HELOCs. Take the time to review your finances, bolster your credit as needed, and shop around for the best terms.

Ready to move forward? Explore your borrowing options today with Rocket Mortgage.

¹ “Home Equity Loan product requires full documentation of income and assets, credit score and max loan-to-value (LTV), combined loan-to-value (CLTV), and home equity combined loan-to-value (HCLTV) ratios. Requirements were updated 11/19/25 and are tiered as follows: 680 minimum FICO with a max LTV/CLTV/HCLTV of 80%, 700 minimum FICO with a max LTV/CLTV/HCLTV of 85%, and 740 minimum FICO with a max LTV/CLTV/HCLTV of 90%. Your debt-to-income ratio (DTI) must be 50% or below. Valid for loan amounts between $45,000.00 and $500,000.00 (minimum loan amount for properties located in Michigan is $10,000.00). Product is a second standalone lien and may not be used for piggyback transactions. Product not available on Ameriprise products. Guidelines may vary for self-employed individuals. Some mortgages may be considered “higher priced” based on the APOR spread test. Higher priced loans are not allowed on properties located in New York. Additional restrictions apply. This is not a commitment to lend."

² Refinancing may increase finance charges over the life of the loan.