The Best HELOC Loans for Bad Credit

A home equity line of credit is a loan that allows you to draw funds on an as-needed basis at variable interest, with your home’s equity as collateral. Based on MoneyGeek’s review, Figure offers the best HELOC loans for borrowers with bad credit.

Advertising & Editorial DisclosureLast Updated: 12/28/2022
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A low credit score can negatively influence several aspects of a HELOC loan. For instance, it is more likely that you will pay higher interest rates than individuals with good credit. You may also need a higher income to be considered for better loan terms. You may still find good offers if you boost your credit score by making early payments on existing debt and reviewing your credit history for errors.

Interest rates for HELOCs vary significantly. However, you can find the best rates and terms for your needs by shopping around and comparing rates across available options.

MoneyGeek’s top pick for the best HELOC loans for bad credit is Figure. The lender has a fully automated application process, quick disbursement time, no closing costs and offers an autopay discount.

Key Takeaways

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A HELOC functions like a credit card, offering a line of credit at variable interest rates to borrowers who can use eligible property as collateral.

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To apply for a HELOC loan if you have a bad credit score, review the lender requirements against your profile and check the terms before submitting your application form online or in person.

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Individuals with poor credit can increase their eligibility for HELOC loans by getting a co-signer, lowering their debt-to-income ratio or boosting credit scores over time.

Best HELOC Loans for Bad Credit 2023

MoneyGeek explored over 35 data points from more than 30 HELOC lenders to determine the top companies to consider if you have a bad credit score. Some primary data points include affordability, repayment terms, disbursement period, credit score requirements and APR.

We discovered that the top HELOC lender for bad credit is Figure. The lender offers up to $400,000 to eligible borrowers against a wide range of properties with no closing or out-of-pocket fees.

MoneyGeek’s Top Pick for Bad Credit: Figure

  • Figure

    Significantly large loan range with no closing or maintenance fees.

    • From 6.55% to 15.54%APR Range
    • $15,000 to $400,000Loan Amount Range
    • 5 to 30 yearsRepayment Terms
    • NoneAnnual Fees
    • 24 hoursPre-Approval Time

    on Figure Website

Other HELOC Loan Options for Bad Credit

Although lenders may be willing to offer you a HELOC loan if you have a bad credit score, finding an offer with the best rates can be challenging. You may need to meet higher income and debt-to-income ratio requirements. Aside from Figure, other lenders to consider for the best HELOC loans for bad credit are listed in the table below.

HELOC Lenders for Bad Credit
  • Lender
    Minimum Credit Score
    Loan Amounts
    APR Range
    Ready to Apply?
  • Citizens Bank


    HELOC: From $17,500

    GoalBuilder HELOC: $5,000
    to $25,000

    Starting at
    Prime - 0.50%

  • Connexus Credit


    From $5,000

    As low as 4.50%
    for 6 months

  • Discover


    $35,000 to

    4.65% to 9.99%

  • SunTrust/Truist


    $10,000 to

    Starting at 4.64%

  • PNC Bank




  • Regions Bank


    $10,000 to

    7.25% to

How to Choose the Right HELOC Loan

While shopping for a HELOC loan, the first consideration will be whether you meet the requirements of your preferred lender. Fortunately, you can use several tips to find a loan product for your situation, including the following:


Check your credit history

A good credit score (FICO score of 670 and above) helps you obtain lower interest on your loan. Before your lender checks your creditworthiness, you may want to ensure there are no errors on your record and dispute any existing ones.


Keep up with HELOC rates

After reviewing your credit record, take the time to understand what you should expect to pay as the APR for your loan. HELOCs feature variable interest rates; it may be beneficial to keep checking your offer for changes and adjusting your payments accordingly.


Watch out for rate increases

Higher interest on your HELOC loan translates to higher monthly payments. Although it may be impossible to predict when the interest rate will increase, comparing the current offer against the maximum limit can help determine a good offer.


Ensure you have enough equity

If you have more home equity, you will likely find better HELOC rates. Lenders determine your equity by subtracting your outstanding debt from your home’s value. Find out how much equity lenders require for the HELOC loan and select the best offer based on your needs.


Understand common HELOC features

You may need to review some key features of your HELOC, especially if you do not have enough information about the loan product. Note the draw and repayment periods, as well as additional features like the closing costs, maintenance fees and payment types like balloon payments.


Be aware of prepayment penalties

Like any other loan product, your lender may charge you for making advance payments for your HELOC loan. Before making any prepayments, be sure to find out if any penalties will apply for paying off your loan early.


Compare rate options

The interest rate for a HELOC usually comprises a benchmark rate plus an additional margin from the lender. That means rates will vary significantly between lenders, depending on your credit score. A lower credit score will result in higher interest and vice versa. By comparing rates across lenders, you can be sure to find the best loan for your needs.


Choose a reputable lender

You may decide to obtain your HELOC from the same lender that offered your mortgage, although this is not compulsory. As you compare different companies, check application and closing costs, interest rates, discounts, loan amounts and the overall lender’s reputation. All this information should be available in the Truth-in-Lending disclosure offered by the lender.

How to Qualify for a HELOC Loan With Bad Credit

Lenders typically consider several factors while reviewing your HELOC loan application, and your credit score is one of them. While some lenders approve applications from borrowers with bad credit, the loans often feature stricter terms, including a higher income requirement and considerably higher interest.

You may decide to improve your credit score to access more favorable terms on HELOC loans. You can achieve this by making consistent, timely payments on existing loans and disputing errors on your credit record. However, building your scores takes time, and you may need to exercise patience and consistency.

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    Boost Your Credit Score

    Credit agencies determine your credit score by reviewing your payment history, debt balances, credit history length, applications for new accounts and the types of credit accounts you hold. You can obtain your credit report online through the Annual Credit Report website or request one from the three major credit reporting agencies.

    Here are some tips that can help boost your credit score:

    • Analyze your credit history for negative remarks or errors to understand what factors may affect your score.
    • Make timely payments for existing debts. If the interest increases, consider getting a personal loan to consolidate all your debts with more favorable terms.
    • If you cannot repay a debt, speak to a lender and negotiate a new repayment plan.
    • Get added to a family member's or friend's credit card as an authorized user. That way, your credit score will improve each time you make timely monthly payments.
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    Get a Co-Signer

    A co-signer is a trusted individual that shares the liability of repaying a HELOC loan with you. Customarily, a co-signer assumes equal ownership and repayment of the loan. While applying for a HELOC with bad credit (FICO score of 579 and below), you may consider a reliable co-signer with more income or a better credit score to increase your chances of loan approval.

    Co-signers may also offer access to more equity, and as such, you will qualify for higher HELOC loan amounts and better rates than if you apply independently. Most borrowers choose their spouses, family members or friends as co-applicants, although you can choose anyone as long as there is mutual trust.

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    Assess Your Debt-to-Income Ratio

    Understanding your debt-to-income (DTI) ratio helps determine your eligibility for HELOCs and other financial products. A DTI is an amount a borrower owes on credit cards, mortgages and other loan products compared to their income level.

    Most lenders require a DTI of 43% and below to grant you a HELOC loan, although some companies may ask for lower ratios. Generally, a lower ratio is better since it shows you do not overstretch your finances while repaying debts. If your DTI is higher than 43%, you may need to reduce it before taking a HELOC.

    One way to lower DTI is by paying down existing debts, starting with the highest payments if possible. To calculate your ratio, add up your monthly loan repayments, divide the total by your monthly income and convert the figure into a percentage. MoneyGeek’s debt-to-income calculator can help you get the percentage in seconds.

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We reviewed more than 30 HELOC lenders using 35+ individual data points across six key categories: loan affordability, accessibility, consumer friendliness, customer service, flexibility and lender transparency.

Within each ranking criteria category, we considered several individual data points that carry the most weight when choosing a HELOC lender. These factors include APR ranges, available loan amount, minimum credit score, minimum income amount, application fees and disbursement time.

With the consumer in mind, we also factor in each lender’s customer support, business ratings and additional features that could make your experience easier and more accessible — like pre-qualification, payment options and mobile apps.

Frequently Asked Questions About HELOCs

Not all lenders offer HELOC loans to borrowers with bad credit. MoneyGeek answers questions about HELOC loans for bad credit to help you make an informed decision while searching for the best lender.