Can I get a HELOC with a 580 credit score?

After years of rapidly increasing home prices, today's homeowners are sitting on unprecedented levels of home equity. Right now, the average homeowner has approximately $330,000 in available equity — up by about $28,000 compared to February 2024. The amount of home equity that can be accessed while maintaining a healthy 20% equity cushion now amounts to $214,000. This hefty amount of equity represents an appealing opportunity for homeowners to access the funds they need with a home equity loan or a home equity line of credit (HELOC).

Accessing your home equity can come with big benefits, too, especially right now. One is that the low average rates on HELOCs and home equity loans make them a lower-cost alternative to credit cards or personal loans. The borrowing limits tend to be higher than what you'd get with a personal loan or credit card, too. As a result, this type of borrowing can be used for a wide range of purposes, whether you need to cover significant expenses from home improvements, medical bills or education costs. 

However, having equity doesn't automatically guarantee access to these funds. Home equity lenders carefully evaluate borrowers' creditworthiness, and factors like a high debt-to-income (DTI) ratio or credit issues can make approval challenging. This raises an important question for homeowners with lower credit scores: Is it possible to get a HELOC with a credit score of 580?

See what HELOC interest rate is available to you here.

Can I get a HELOC with a 580 credit score?

Getting approved for a HELOC with a 580 credit score is generally difficult. Most traditional lenders require a minimum credit score of 620 to 660 to qualify, with some requiring scores of 680 or higher. A 580 credit score is considered "poor" by most lending standards, which makes approval from conventional banks and credit unions unlikely.

That said, it may not be impossible to get approved for a HELOC with this type of credit score. While a 580 credit score is lower than what's typically required, there are lenders open to borrowers with credit challenges and some non-traditional lenders specialize in working with borrowers who have lower credit scores. To be approved, though, you'll likely need significant equity in your home, often 40% or more, along with a low DTI ratio and stable income history. They'll also typically want to see that you've maintained a clean payment history on your existing mortgage, as that can lower the risk of approving you to borrow money.

Another factor these lenders examine is your home's loan-to-value (LTV) ratio, or how much you owe compared to its current value. If your LTV is high — meaning you've borrowed a large percentage of your home's value — getting approved could be harder. Most lenders prefer LTV ratios at or below 80%, though some may go higher depending on other qualifying factors. With a higher amount of equity, lenders may view your application more favorably, despite your low credit score.

If you are approved for a HELOC with a 580 credit score, there is a tradeoff to consider: your interest rate. If your score is below average, you can expect to be offered a higher interest rate than what you'd get with a better credit score. This higher rate accounts for the lender's increased risk when lending to someone with poor credit. This increased interest rate could impact your monthly payment and your ability to repay the line of credit.

Find out how affordable home equity borrowing could be now.

What other home equity borrowing options do I have?

If a HELOC isn't feasible due to your credit score or other factors, you may want to consider these other home equity borrowing options:

• Home equity loan: Unlike a HELOC, which is a line of credit, a home equity loan provides a lump sum and fixed interest rate, allowing for consistent monthly payments. Some lenders may have more flexibility in approving home equity loans compared to HELOCs. With a credit score of 580, you may still face challenges, but it could be worth exploring lenders who work with lower credit scores.
• Cash-out refinance: A cash-out refinance involves replacing your current mortgage with a new one that is larger than your current loan balance. The difference is paid to you in cash, which you can use however you'd like. Cash-out refinancing might be a better option if your credit score disqualifies you from a HELOC since lenders tend to prioritize the primary mortgage. However, your credit score will still impact your interest rate and loan terms.

The bottom line

Though a HELOC can be difficult to secure with a 580 credit score, it could still be possible. However, you'll likely pay a lot more in interest if you're approved. So, if you don't need the funds immediately, it could benefit you to take steps to improve your credit score first, which can increase your options over time. By improving your creditworthiness, you'll be better positioned to access the funds you need for home improvement projects, debt consolidation or any other financial needs.