As a homeowner, you can consider a Home Equity Line of Credit (HELOC) to renew or renovate your home. The HELOC is a revolving line of credit that lets you borrow against the equity in the home. The amount you take is determined by the current market value of the property minus the remaining balance on your mortgage. You can use this fund as per your needs. But did you know while applying for HELOC, lenders check your credit? Let me brief you on how does HELOC affect credit score.
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What are the HELOC credit score requirements?
While applying for HELOC the lender will definitely check your credit history. But the impact will be minimal if you have not applied for credit recently. Your credit report will be based on two years but your credit score impacts your 6-month records.
With this being said, I would like to tell you that HELOC can help you improve your credit history. Now to improve your credit score through HELOC you need to manage the funds and accounts properly. Using too many credit cards can make you fall into the high credit utilisation category which will hurt your credit score. Using HELOC to pay the balance can improve the score.
Lenders always perform a hard credit enquiry when they offer HELOC. So, in conclusion, I would like to tell you to focus on your credit history while applying. A good credit score builds trust so with a good credit history many banks or lenders will offer you HELOC or any type of loan easily. Paying the bills on time and maintaining your account is the only solution to maintaining a good credit history! :)
I hope you know how does HELOC affect credit score now.
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How does HELOC affect credit score?
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2022-11-18T09:20:14+00:00 2022-11-18T09:20:17+00:00Comment
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