Mario Cazombo

Gen Xers and Millennials would like to know if they’re going to inherit (and how much), but Baby Boomers in general don’t like to talk about money. What to do?

How to Get a Home Equity Loan With Bad Credit: Quick Answer You can get a home equity loan with bad credit, but you will most likely need more equity and less debt than someone with good credit. You will also pay a higher interest rate. Your best chance of approval might be going with your current mortgage lender. Money’s main takeaways Home equity loans let you leverage the increase in your home’s value and use the proceeds for just about any purpose, from home renovations to consolidating high-interest debt. Some home equity and HELOC lenders have credit score requirements in the 600s. However, you will pay a higher rate and likely be required to have at least 20% equity in your home. Your existing mortgage lender may approve you with a lower credit score if you have a history of on-time payments and a steady income. Disputing incorrect or outdated information on your credit report, getting a cosigner, and reducing your DTI are all ways to improve your chances. Read on to find out how you could qualify for a home equity loan, even with bad credit. Table of Contents How do home equity loans and HELOCs work? How to qualify for a home equity loan with bad credit Home equity loan alternatives Summary of Money’s Home Equity Loan with Bad Credit How do home equity loans and HELOCs work? There are many ways to leverage the equity you have in your home. Two of the most popular? Home equity loans, sometimes called second mortgages, and home equity lines of credit (HELOCs). Both options allow homeowners to borrow approximately 80% to 90% of their home’s equity (minus their current mortgage balance), but they do so in different ways. Home equity loans, for instance, provide you with a lump sum that you’ll pay back in installments over a set amount of time. HELOCs, on the other hand, are a type of revolving credit. This means you can borrow up to a pre-established credit limit during its draw period, and that credit becomes available again as you pay back what you’ve borrowed. Once the draw period ends, the repayment period begins, and you will no longer be able to withdraw money. It’s important to note that both loans present a big risk: Since your home serves as collateral, the bank could foreclose on it if you fail to make your payments. Both types of loans have similar requirements, and while it might be challenging to qualify for these with a bad credit score, it’s not impossible, provided you meet other criteria. For example, banks that serve borrowers with low credit scores may require higher income and, therefore, a lower debt-to-income ratio. They might also come with higher interest rates (due to their higher risk) or ask for a greater percentage of equity in the home, as this increases the skin you have in the game and reduces the chance you’ll skip out on payments. Approval is not guaranteed You should know that a poor credit history significantly reduces your chances of approval or will come at a higher cost in terms of stricter qualifying requirements that must be met and higher interest rates. If a home equity lender “guarantees” approval, it should raise a red flag and you should be extremely cautious about applying for a home equity loan with that lender. Always get a full loan estimate that breaks down the costs and fees of any loan you’re considering. You should also get quotes from a few different lenders to ensure you’re getting the best deal. Can you get a home equity loan with bad credit? If your FICO score is between 620 and 700, you could probably qualify for a home equity loan with some lenders, provided you have enough equity in your home and a high income. Home equity lenders typically approve borrowers with 15% to 20% equity in their homes. If your score is below 700, however, they may require at least 20%. In addition to your credit score and equity, lenders will also consider your income and debt-to-income (DTI) ratio. This is the percentage of your monthly gross income that goes toward paying your existing debts — plus your new expected home equity loan payment. Many lenders allow for a maximum DTI of 43%, although some might ask for a much lower percentage if you have a low credit score. Can I get a HELOC with bad credit? Much like home equity loans, most HELOC lenders require a minimum credit score in the 620-700 range, at least 15%-20% equity in the home, and a maximum DTI of 43%. One thing to consider, however, is that unlike fixed-rate home equity loans, HELOCs typically have variable interest rates. This could increase your rate and payment over time, making it harder to budget. If you have bad credit and are applying for a HELOC, it’s important to remember that lenders will probably offer you higher interest rates, and those could become even higher over the life of the loan. This can be dangerous if you’re on a tight budget or don’t expect to earn more once those higher payments come around. It could also put you at risk of foreclosure if you can’t make payments. Requirements to get a home equity loan with bad credit Lenders that issue bad credit home equity loans will likely require the following: A minimum credit score of 620 15% to 20% equity in the house Maximum DTI of 43% Be able to pay the loan origination fee and other closing costs Consistent income/employment history Qualifying for a loan will be difficult if you don’t meet these requirements. Remember, though: Lenders can vary widely on qualifying requirements and loan programs. If you’re worried about qualifying, shop around and compare options from several banks and lenders. How to qualify for a home equity loan with bad credit While it’s not easy to qualify for a home equity loan or a home equity line of

Poor investment returns early in retirement on top of withdrawals can quickly drain your savings. The ideal plan helps prevent having to sell assets at a loss.

If your bills have piled up — medical costs, maxed-out credit cards, or the threat of foreclosure — filing for bankruptcy can feel like your only option. It can also feel like one more expense you can’t afford. But if you’re going to file, hiring a bankruptcy attorney is often the smartest money move you can make. Bankruptcy is federal, technical, and deadline-driven. A missed form or a missed meeting can delay your case or even get it dismissed. A good lawyer helps you pick the right type of bankruptcy, protect what you can keep and steer you through the paperwork and court calendar so you don’t make costly mistakes. Do you have to hire a lawyer? No. A lawyer is not required to file for bankruptcy. You have the right to “pro se” representation, meaning you’ll represent yourself during the court proceedings, and you can find plenty of resources that explain how to file for bankruptcy. But bankruptcy law is complicated. Judges, trustees and court clerks can’t give you legal advice, and bankruptcy requires accurate, timely filings plus court hearings you’ll want to be prepared for. Studies and reporting generally show that people who go it alone are less likely to get a full discharge than those who hire counsel. In short: you don’t have to hire an attorney, but you very likely should. What a bankruptcy lawyer actually does for you A bankruptcy lawyer will: Explain which chapter — usually Chapter 7 or Chapter 13 for most individuals — fits your situation and why. Advise whether you can keep your home, your car, or other property. Help you prepare and file the petition and the long list of required forms. Represent you at the 341 “meeting of creditors,” where a trustee questions you under oath. Missing that meeting can jeopardize your case. Enforce the automatic stay, the court order that generally stops most collection efforts as soon as you file. If a creditor ignores the stay, your lawyer can ask the court to sanction them. Draft and negotiate a Chapter 13 repayment plan if that’s your route, or handle issues that arise after filing. Where to look for a bankruptcy attorney Start with people and organizations that have your best interests in mind: Friends and family. Personal referrals give you a sense of how a lawyer treats clients and whether they get results. State and local bar referral services. These services can match you with attorneys who practice bankruptcy law in your area. National groups that focus on consumer bankruptcy. The National Association of Consumer Bankruptcy Attorneys (NACBA) and similar groups list members who focus on consumer bankruptcy. The American Bar Association and your state bar. Both let you search for bankruptcy specialists and check discipline records. Legal aid and pro bono clinics. If you can’t afford private counsel, see whether a legal aid program or bankruptcy clinic can help. (Many courts publish local pro bono lists.)How do you find a suitable attorney for your bankruptcy team? How to vet bankruptcy attorneys — what to ask and what matters Experience: Pick someone who handles lots of consumer bankruptcy cases, not a generalist who dabbles. Chapter 7 and Chapter 13 are the most common for individuals; attorneys who mostly do Chapter 11 (reorganization) usually work with businesses and complex cases, so they may not be the best fit for a typical consumer filing. Ask how many cases they file each year and what percentage are consumer bankruptcies. Firm size and fit: Large firms bring resources and depth; small firms often feel more personal and can be less expensive. Meet folks from firms of different sizes and judge who you trust and who answers your questions clearly. Fees and payment: Costs vary by state, by complexity, and by chapter. Many Chapter 7 lawyers expect payment before they file your petition; Chapter 13 fees are often rolled into your repayment plan. Ask exactly how and when the law firm expects to be paid, what’s included, and whether there are extra costs (like trustee fees or credit-counseling costs). Many reputable lawyers offer a free initial consultation — use it to interview several candidates. Communication and trust: You’ll need to be honest about your finances. Choose someone who explains things clearly, answers promptly, and gives realistic expectations. Bankruptcy is stressful; you want an attorney who’s a calm guide, not someone who talks over you. Red flags to watch for Too many clients, too little attention. If a firm seems rushed or can’t explain how much time your case will get, think twice. Pushy sales tactics. Reputable attorneys explain options and let you decide. They don’t pressure you into filing immediately or into unnecessary services. Unclear fee practices. If fee arrangements aren’t spelled out in writing, walk away. No willingness to meet or explain. Many bankruptcy lawyers offer a free consult; a strict “no free consult” policy isn’t always a deal breaker, but it’s reasonable to expect an affordable or free way to learn whether you qualify. Can a lawyer stop a foreclosure or repossession? Often filing for bankruptcy triggers an automatic stay, which generally halts most collection activity, including foreclosure and wage garnishment, at least temporarily. That doesn’t mean every problem disappears — and some creditors can ask the court to lift the stay — but an experienced lawyer can file emergency pleadings and help preserve your home while the court sorts things out. If you can’t afford a lawyer Don’t give up. Many courts maintain lists of free or low-cost legal aid providers. Local legal aid societies, law school clinics, and bankruptcy pro bono programs can sometimes provide full representation or limited help with forms and hearings. Even if you must represent yourself, get help with the initial paperwork so you don’t miss critical steps.

The article about lawyers billing clients for hours of work that AI did in seconds generated quite a response. One law firm even called a staff meeting.