Minimum Credit Score for HELOC: What You Need to Know in 2025

Here’s the straight answer: Most lenders want to see a credit score of at least 620 to approve you for a Home Equity Line of Credit. But—and this is a big but—that’s just the baseline.

Think of 620 as getting your foot in the door. You’re not exactly getting the VIP treatment. The real sweet spot? That’s when you hit 680 or higher. At that point, lenders start rolling out the red carpet with better interest rates and higher credit limits.

The Credit Score Breakdown

Let’s put this in perspective:

• 740 and above: You’re golden. Expect the lowest interest rates and the most generous terms. Lenders are practically begging you to borrow from them.
• 680-739: Solid territory. You’ll get approved at most major banks with competitive rates.
• 620-679: You’re in the maybe zone. Approval is possible, but you’ll pay more in interest and might face stricter requirements.
• Below 620: It’s tough, but not impossible. You’ll need to hunt for specialized lenders or consider alternatives.

Can You Actually Get a HELOC with Bad Credit?

Let’s be real—if your credit score is sitting below 620, you’re not exactly in prime position. But here’s the thing: it’s not game over.

Some credit unions and community banks will work with borrowers who have scores as low as 600. The catch? You’ll face higher interest rates (sometimes significantly higher), smaller credit limits, and they’ll scrutinize every other aspect of your financial life.

Think of it like this: if your credit score is weak, you’ll need to compensate somewhere else. Maybe that’s having a massive amount of equity in your home (we’re talking 40% or more). Or perhaps you bring a co-signer with stellar credit to the table.

The Real Talk About Bad Credit HELOCs

Banks aren’t running charities. When they see a lower credit score, they see risk. And risk costs money. So while yes, you can get a HELOC with bad credit, you might end up paying 2-4% more in interest compared to someone with excellent credit. Over the life of a $50,000 HELOC, that difference could cost you thousands.

How Your Credit Score Actually Impacts Your HELOC Terms

Your credit score isn’t just a pass/fail test. It’s more like a sliding scale that determines your entire HELOC experience.

Note: LTV = Loan-to-Value ratio

Here’s what this means in dollars and cents. Let’s say you’re borrowing $75,000:

• With a 760 credit score at 7% APR: Your interest costs are roughly $5,250 annually
• With a 650 credit score at 10% APR: You’re looking at $7,500 annually
• That’s an extra $2,250 out of your pocket every single year

Understanding these numbers is crucial when you’re managing your debt and making financial decisions about leveraging your home equity.

Beyond the Credit Score: What Else Do Lenders Care About?

Here’s something that might surprise you: your credit score is only part of the equation. Lenders are looking at the bigger picture of your financial health.

Debt-to-Income Ratio (DTI)

This is huge. Most lenders want your DTI below 43%. What does that mean? If you earn $6,000 per month, your total debt payments (mortgage, car loans, credit cards, the works) shouldn’t exceed $2,580.

Got a high income? That can offset a borderline credit score. Drowning in debt? Even a great credit score might not save you.

Loan-to-Value Ratio (LTV)

Lenders typically want you to maintain at least 15-20% equity in your home after the HELOC. So if your home is worth $400,000, they’ll usually only let you borrow up to 80-85% of that value, minus what you owe on your mortgage.

Quick example:

• Home value: $400,000
• Current mortgage: $250,000
• Maximum HELOC at 80% LTV: $320,000 – $250,000 = $70,000

The more equity you have, the more flexibility lenders show with credit requirements. Someone with 50% equity and a 640 credit score might get better terms than someone with 20% equity and a 680 score.

Income Stability and Employment History

Been job-hopping every six months? That’s a red flag. Lenders love seeing steady employment—ideally two years or more at the same employer or in the same field. Self-employed? You’ll need to prove consistent income through tax returns and bank statements.

Payment History

This is actually more important than many people realize. Even if your credit score is decent, a recent history of late payments (especially on your mortgage) can sink your application faster than anything else.

If you’re struggling with payments, consider working with free credit counseling services to get back on track before applying.

Can Improving Your Credit Score Really Help?

Short answer: Absolutely, yes.

Raising your credit score from 620 to 700 can be the difference between rejection and approval. Even better? It could save you tens of thousands in interest over the life of your HELOC.

The 90-Day Game Plan

Want to boost your score before applying? Here’s what actually works:

Month 1: Stop the bleeding

• Pay every single bill on time (set up autopay if you’re forgetful)
• Don’t apply for any new credit
• Check your credit reports for errors (you’d be shocked how common they are)

Month 2: Attack high balances

• Focus on credit cards that are maxed out or close to it
• Get your credit utilization below 30% (below 10% is even better)
• Consider a balance transfer if it makes sense

Month 3: Strategic moves

• Become an authorized user on someone else’s card with perfect payment history
• Pay down any collections or small debts
• Request credit limit increases on cards in good standing

This isn’t magic. But borrowers who follow this plan consistently see score increases of 30-60 points. That could literally be worth thousands in better HELOC rates.

What If You Don’t Meet the Minimum? Exploring Your Options

Alright, so you checked your credit score and it’s not pretty. Don’t panic. You’ve got options.

Option 1: Bring in a Co-Borrower

Got a spouse, family member, or partner with better credit? Adding them to the application can dramatically improve your chances. Just make sure they understand they’re equally responsible for the debt.

Option 2: Build More Equity

Sometimes the answer is simple: wait. Keep paying down your mortgage, let your home value appreciate, and suddenly you’ve got more equity to work with. More equity = less risk for lenders = more flexibility with credit requirements.

Option 3: Consider Alternatives

A HELOC isn’t your only option:

• Home Equity Loan: Fixed rate, lump sum. Sometimes easier to qualify for than a HELOC.
• Cash-Out Refinance: Refinance your entire mortgage and pull cash out. Can work if current rates are competitive.
• Personal Loan: Unsecured, so no home equity required. Higher rates but might be easier to get approved.

If you’re exploring different borrowing options, understanding the differences between various types of credit products can help you make the right choice.

Lender Shopping: Not All HELOC Requirements Are Created Equal

Here’s something banks don’t advertise: requirements vary wildly between lenders.

Big Banks vs. Credit Unions vs. Online Lenders

Major Banks (Chase, Wells Fargo, Bank of America):

• Typically require 680+ credit scores
• More rigid underwriting
• Competitive rates for qualified borrowers
• Robust online tools and resources

Credit Unions:

• Often more flexible with credit scores (620-640 range)
• Relationship banking matters
• May consider your whole financial picture
• Sometimes better rates for members

Online Lenders:

• Varying requirements
• Faster approval processes
• May accept lower scores but charge higher rates
• Less hand-holding through the process

The Pre-Qualification Strategy

Smart move: get pre-qualified at 3-4 different lenders. Most offer soft credit checks that won’t hurt your score. This gives you a realistic picture of:

• What rate you’ll actually get
• How much you can borrow
• What your monthly payments might look like

Major lenders like Bank of America, Wells Fargo, and Discover all offer pre-qualification tools. Use them. Seriously.

Will Applying for a HELOC Trash Your Credit Score?

Let’s address the elephant in the room. Yes, applying for a HELOC will ding your credit score. But it’s not as scary as it sounds.

The reality:

• Hard inquiry: 5-10 point drop (temporary)
• Multiple inquiries within 14-45 days count as one (rate shopping is expected)
• Score typically rebounds within a few months
• Responsible HELOC usage can actually improve your score long-term

Think of it like this: would you avoid going to the doctor for a checkup because you’re afraid of the scale? The temporary hit is worth it if you’re getting a financial tool that helps you.

That said, if you’re planning to apply for a mortgage soon, you might want to wait. Applying for multiple credit products in a short time frame can be a red flag to lenders.

Different Types of Lenders, Different Rules

Community Banks and Regional Lenders

These smaller institutions sometimes have more flexible underwriting. They can look beyond just your credit score and consider your relationship with the bank, local property values, and your overall financial stability.

The downside? Their rates might not be as competitive, and they typically offer smaller credit limits.

Specialized HELOC Lenders

Some lenders focus specifically on home equity products. They often have:

• Streamlined application processes
• Competitive rates for qualified borrowers
• More rigid credit score requirements
• Limited personal service

Credit Unions That Work with Fair Credit

Not all credit unions are created equal, but many pride themselves on serving members who might not qualify at big banks. Some credit unions even offer special programs for members working to improve their credit.

If you’re dealing with debt consolidation, some credit unions offer debt consolidation loans that might be worth exploring alongside HELOC options.

The Application Process: What to Expect

Knowledge is power. Here’s what happens when you apply:

Step 1: Pre-Qualification (Soft Pull)

You submit basic info, lender gives you an estimate. No impact on credit score.

Step 2: Formal Application (Hard Pull)

You submit full documentation. This triggers a hard credit inquiry.

Step 3: Underwriting

Lender verifies everything: income, employment, property value, existing debts. This can take 2-6 weeks.

Step 4: Home Appraisal

Lender orders an appraisal to confirm your home’s value. You’ll pay $300-500 for this.

Step 5: Approval and Closing

If approved, you’ll sign paperwork and the HELOC becomes available.

What You’ll Need to Provide:

• Pay stubs and W-2s (last 2 years)
• Tax returns (if self-employed)
• Bank statements (2-3 months)
• Current mortgage statement
• Photo ID
• Proof of homeowner’s insurance

Pro tip: Have all this ready before you apply. It speeds up the process dramatically.

Smart Strategies for Different Credit Situations

If You Have Excellent Credit (740+)

• Shop aggressively for the best rate
• Negotiate fees and closing costs
• Consider a larger credit line (you don’t have to use it all)
• Look at promotional rate offers

If You Have Good Credit (680-739)

• Focus on lenders known for competitive good-credit rates
• Consider paying points to lower your rate
• Build relationships with multiple lenders
• Don’t settle for the first offer

If You Have Fair Credit (620-679)

• Cast a wide net—apply to credit unions and community banks
• Consider a co-borrower
• Be prepared to provide extensive documentation
• Build your case with stable income and employment
• Think about how to avoid debt traps before taking on new credit

If You’re Below 620

• Focus on building equity first
• Spend 3-6 months improving your credit
• Look at alternative financing
• Consider whether a HELOC is really the right move right now

Red Flags That’ll Kill Your Application (Regardless of Credit Score)

Even with a decent credit score, certain things will make lenders run for the hills:

• Recent bankruptcy: Most lenders want 2-4 years of distance
• Current foreclosure proceedings: Automatic disqualifier
• Recent short sale: Similar to foreclosure
• Tax liens or judgments: Need to be resolved first
• Unstable income: Job changes in the last 6 months can be problematic
• Mortgage delinquencies: Even one late payment in the last year is bad news

The Hidden Costs of HELOCs (That Nobody Talks About)

Your credit score affects your rate, but there are other costs to consider:

• Origination fees: 2-5% of the credit line
• Annual fees: $50-100 per year
• Early closure fees: If you close within 2-3 years
• Inactivity fees: Some lenders charge if you don’t use the line
• Transaction fees: Drawing funds might cost $20-50 per transaction

These can add up. Make sure you understand the full cost structure before signing.

HELOC vs. Home Equity Loan: Does Your Credit Score Matter More for One?

Quick comparison:

HELOC:

• Variable rate (usually)
• Revolving credit line
• Credit score heavily impacts approval
• More flexibility

Home Equity Loan:

• Fixed rate
• Lump sum disbursement
• Slightly more forgiving credit requirements sometimes
• Predictable payments

For borrowers with fair credit (620-680), a home equity loan might actually be easier to qualify for because lenders see less ongoing risk. Something to consider.

When to Wait (Even If You Qualify)

Just because you can get approved doesn’t mean you should apply. Consider waiting if:

• You’re planning to sell your home in the next 2-3 years
• Interest rates are at historic highs
• You’re not sure what you’ll use the money for
• Your job situation is unstable
• You’re already struggling with debt payments

Sometimes the smartest financial move is patience. If you’re exploring ways to manage expenses better, check out strategies for cutting down monthly expenses instead.

Final Thoughts: Your Credit Score Is Just the Beginning

Look, getting approved for a HELOC isn’t just about hitting a magic credit score number. It’s about presenting yourself as a low-risk borrower who can handle the responsibility of borrowing against your home.

Yes, you generally need at least a 620 credit score. But if you’re at 680 or above, you’re in a much stronger position. And if you’re below 620? Don’t give up—focus on improving your credit for 3-6 months and you might be surprised at the difference.

Remember: your home is your biggest asset. Treat it with respect. Use a HELOC strategically—whether that’s consolidating high-interest debt, making value-adding improvements, or covering major expenses. But don’t treat it like free money. Because it’s not. It’s your home equity, and it took you years to build it.

Ready to Take the Next Step?

If you’re serious about getting a HELOC, start by checking your credit score today (for free at AnnualCreditReport.com). Then shop around with at least three lenders to see what you qualify for. Knowledge is power, and knowing where you stand puts you in control.

Your home equity is a powerful financial tool. With the right credit score and preparation, a HELOC could be exactly what you need to reach your financial goals. Just make sure you’re ready for the responsibility that comes with it.

Looking for more financial guidance? Visit Wealthopedia for expert advice on loans, debt management, insurance, and wealth building strategies.