If you have a credit score below 640, many bad credit home equity loan programs won’t go over 80% loan to value. However, there are quite a few bad credit home loans available with credit scores as low as 580. Of course the mortgage rates might increase as your score decreases, but that depends on how much equity you have.
If you have any accounts in collection, mortgage lenders typically require them to be paid off before considering your application. Consumer credit counseling is usually not permitted within 2 to 5 years, and a prior bankruptcy is usually not allowed within the last 2 to 7 years. Your mortgage payments must be current and you can’t have late mortgage payments over 30 days within the last 12 months.
When you qualify for a home equity loan or second mortgage, most lenders use the middle of 3 credit scores from whoever makes the most money on the loan application. Sometimes you can exclude a spouse from an application to avoid a problem, but that’s a real challenge.