Home Equity Loans for Bad Credit

Requirements can vary depending on the lender. Most lenders prefer to see a minimum credit score of 620 to qualify for a home equity loan. While this is not set in stone, and may be lower or higher, this can be used as a general marker. Additionally, most lenders will require you to have at least 15% to 20% equity in your home. 

Equity and credit scores usually do not go hand in hand. If you have equity in your home and can qualify for a home equity loan, you can use it to qualify in most cases. If you prefer to avoid using your home as collateral, consider taking out a personal loan instead. 

Home equity loans are not for everyone. At Acorn Finance, we can provide a wealth of information about financial products such as home equity loans. Alternatively we have a network of lending partners that can offer unsecured home improvement loans. Within 60 seconds or less you can check home improvement loan offers with no credit score impact. For some, the realization that you can access funding without leveraging your home as collateral is enough to sway your decision. Visit Acorn Finance today to learn more about home improvement loans. 

• Prepare your documents: Have your income verification (W-2s, pay stubs, bank statements, tax returns) ready.
• Check your credit: Most lenders require a score in the low to mid-600s or higher.
• Appraisal: Some lenders may require an appraisal to determine your home’s value and equity.
• Shop around: Compare loan offers for interest rates, terms, fees, and co-borrower or co-signer options. Tools like Acorn Finance allow you to receive multiple pre-qualified offers with a single form, without a hard credit pull.
• Apply: Submit documents and complete the application. Approval decisions are typically made within a few days, and funds may be available in about a week.

• Home equity loan: Lump sum, fixed interest, fixed monthly payments. Best for large, one-time projects.
• HELOC: Revolving line of credit with variable interest rates. Funds can be withdrawn over time, making it ideal for ongoing or smaller projects.

Yes, though home improvements are the most recommended. Other uses include:

• Student loans
• Emergency expenses
• Wedding expenses
• Business expenses
• Debt consolidation

• Equity: Typically 15–20% of your home’s value
• Credit score: Usually mid-600s or higher
• Debt-to-income ratio: Often 43% or lower (can vary by lender)
• Income and payment history: Must show reliable income and bill payment history
• Fees: Closing costs and other fees may apply

Yes. If you have sufficient equity in your home, you can often qualify for a home equity loan regardless of your credit score. However, since the loan is secured by your home, you may want to consider other options—like a personal loan—if you prefer not to put your home at risk.