HELOC credit score requirements

Key takeaways

Lenders usually review your credit score when determining whether you qualify for a HELOC.
Other factors lenders may take into account include your home equity amount, DTI ratio, and CLTV ratio.
You may be able to improve your credit score by avoiding late payments and increasing your credit utilization ratio.

Please note: Discover® Home Loans offers a home equity loan product but does not offer HELOCs.

Want to qualify for a home equity line of credit (HELOC)? Your credit score will likely play a big role. Lenders typically have a minimum credit score requirement, while a higher score may help you secure better interest rates.

Understanding why your credit score matters for a HELOC

Lenders typically consider your credit score when determining your eligibility for a HELOC. Having a higher credit score may mean you are more likely to get credit because businesses think you are less of a financial risk.

Different lenders will have different minimum credit score requirements to qualify for a HELOC.

If you're concerned that your credit score may be too low to qualify for a HELOC, you may still find options by shopping around for different lenders.

Additional requirements for a HELOC

Other factors that a lender may consider in addition to your credit score include:

Amount of home equity: Home equity is the difference between the current appraised value of your home and how much you owe on your mortgage.
Debt-to-income (DTI) ratio: This is the percentage of your gross monthly income that goes toward debt payments, such as car payments and credit card bills.
Loan-to-value (LTV) ratio: Your LTV ratio is your current mortgage balance divided by your home's appraised value. Lenders typically set LTV ratio limits as a certain percentage of a home's appraised value.
Combined loan-to-value (CLTV) ratio: Your CLTV ratio is calculated by adding your existing mortgage balance(s), the balance of any other loans secured by your home, and your potential new loan amount and then dividing this amount by the appraised value of your home.

Couple checking their credit score before applying for a HELOC.

Different lenders will have different credit score requirements for a HELOC

Tips to potentially increase your HELOC credit score

Here are some things you can do that may increase your credit score for a HELOC:

Make sure your credit reports are accurate

Whether or not you're applying for credit, it's a good idea to review your credit report regularly. Check your report for mistakes, such as accounts fraudulently opened in your name or payments that were incorrectly reported as late. If there are errors, you can contact the credit reference bureau and ask them to correct your report.

Avoid late payments

In most credit scoring models, repayment history is the most important factor for building a strong credit score. Therefore, it's crucial to avoid late payments. Even if money is tight, try to make the minimum payment on any credit cards and other debts on time.

Lower your credit utilization ratio

Your credit utilization ratio — the percentage of your available credit that you currently use — is another factor that determines your credit score. As a general goal, you should keep your credit utilization ratio below 30%. This means that if you have a credit card with a borrowing limit of $10,000, you should try to keep your balance under $3,000.

Credit score for a HELOC

A lower credit score doesn't always mean you'll be ineligible for a HELOC. Lenders may also consider other factors when determining your eligibility, such as your home equity amount, DTI ratio, and CLTV ratio.

If your current credit score is too low to qualify for the best interest rates and terms, you may want to wait to apply and take action to improve your score. Potential ways to do this include paying bills on time and lowering your credit utilization ratio. This may also increase your chances of getting better terms on other home equity financing products.

Looking for an alternative to a HELOC? Discover Home Loans offers low, fixed-rate home equity loans between $35,000 and $300,000 (2nd Lien) up to 90% CLTV.

Main: The information provided herein is for informational purposes only and is not intended to be construed as professional advice. Nothing contained in this article shall give rise to, or be construed to give rise to, any obligation or liability whatsoever on the part of Capital One, N.A. or its affiliates.

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We do not lend in IA or MD. You are not guaranteed approval. Once you apply and submit your credit and property information, we will confirm your eligibility. We don’t lend on cooperatives, condotels, investment properties, log homes, manufactured homes, mobile homes, or secondary homes. We will only originate one 1st lien mortgage per property per 12-month period. The maximum loan amount you qualify for will depend on additional factors, including type of loan, lien position, loan-to-value and your credit history. We may change rates, program terms, and conditions without notice. Discover Card accounts and other Capital One accounts (with the exception of Discover home and personal loans) may not be paid off with this home loan. All loan programs are offered by Capital One, N.A., 2500 Lake Cook Road, Riverwoods, IL 60015. NMLS ID 453156.