Checking | Auto Loans | Mortgage | HELOC | Personal Loans | Credit Cards | Membership

HELOC credit score requirements, application process and more

If you’re a homeowner in need of extra cash to pay for home improvements, medical bills, college tuition and other expenses, you may be considering apply for a Home Equity Line of Credit (HELOC).
Each lender has HELOC qualification requirements for borrowers, including sufficient home equity, a favorable debt-to-income (DTI) ratio, a minimum credit score for a HELOC in the mid-600s.
Read on to learn more about the credit score needed for a HELOC.
At Credit Union of Southern California (CU SoCal), we make getting a Home Equity Line of Credit (HELOC) easier.
Call 866.287.6225 today to schedule a no-obligation consultation and learn about our home equity lines of credit, auto loans, personal loans, checking and savings accounts, and other banking products. As a full-service financial institution, we look forward to helping you with all your banking needs.

Get Started on Your Home Equity Loan Today!

What are HELOCs and how do they work?

A HELOC is a type of secured loan that lets you borrow money as a line of credit. A line of credit limit is determined by the lender based on several factors, including the equity in your home, your property’s fair market value, and your credit score. Generally, the more equity you have, the higher the amount of credit you’ll be approved for.
A secured loan requires the borrower to pledge an asset as collateral to “secure” the loan. With a HELOC, your home is the collateral securing the loan. This means if you fail to repay the loan, the lender can foreclose and take your home.
Getting a HELOC is a straightforward process, and many homeowners benefit greatly from their HELOC. HELOC funds can be used for anything, including making home renovations, paying off high-interest debt, paying for college tuition and even as a down payment on a second home or investment property.

Credit score needed for HELOC

While each credit union, bank, and online lender has unique HELOC credit score requirements, generally, an average credit score for a HELOC of 680 will get you qualified. The higher your credit score, the better (lower) the interest rate you’ll be offered on a HELOC and other loans. A credit score of 720 or higher could get you that low interest rate you’re looking for.

Additional HELOC requirements

Home equity. Equity is the amount of the home you own free and clear. A homeowner who doesn’t have a mortgage loan has 100% equity in their home. To calculate equity, subtract your mortgage amount from your property’s appraised or market value amount. For example: Appraised value $600,000 – Amount owed on mortgage $250,000 = $350,000 equity. Divide the equity ($350,000) by the home value ($600,000), which is 58% equity. Lenders typically look for at least 15-20% equity in a home.
Debt-to-income (DTI) ratio. Your DTI ratio is a comparison between your income and your monthly debt payments. To calculate your DTI ratio, add all your monthly debt payments and divide that number by your gross monthly income. For example: If you pay $1,800 a month for your mortgage and $350 a month for an auto loan, then $1,800 + $350 = $2,150 monthly debt. If your gross monthly income is $6,000, then your debt-to-income ratio is 35%. ($2,150 ÷ $6,000 = .35). 
Income. A specific income is not needed to qualify for a HELOC; however, income is essential to determining your DTI ratio.
How are credit scores calculated?
FICO®, is the most widely used credit scoring company that utilizes a score range of 350 to 850. Lenders look at your credit score when you apply for a loan and use the risk factor to determine if you are credit worthy and what interest rate to offer. Low credit scores are considered high risk for loan default, and high credit scores are considered less risk.
To calculate credit scores, FICO uses the following five categories. (The percentages in the parentheses below reflect how important each of the categories is in determining how your FICO Scores is calculated.)
Payment history (35%). This is the most important factor in a FICO Score. Payment history keeps track of whether you have been able to meet all your payments on time when payments are due. This can take into consideration your payments on credit cards, mortgage, car loan, student loans, medical bills, and other personal debt. The more consistently you complete your payments, the higher your score will be.
Amounts owed (30%). Having credit accounts and owing money on them doesn’t necessarily mean you are a high-risk borrower with a low FICO Score. However, if you are using a lot of your available credit, this may indicate that you are overextended—and banks can interpret this to mean that you are at a higher risk of defaulting. Amounts owed can also be referred to as “debt burden.”
Length of credit history (15%). Your credit history and age of your accounts contributes to 15% of your credit score. The longer you have had your credit accounts, like a credit card, the better a potential lender is to see how you manage debt. If you've successfully paid your credit card bill each month for several years, lenders will see you are a reliable borrower.
Credit mix (10%). FICO Scores will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. Don't worry, it's not necessary to have one of each.
New credit (10%). Research shows that new credit applications and opening several credit accounts in a short amount of time represents a greater risk, especially for people who don't have a long credit history.
How to improve your credit score
Everyone’s credit profile is unique. Therefore, the importance of the categories listed above will be different for everyone. For example, the credit scores of people who have not been using credit for very long (such as young adults) will be calculated differently than those with a longer credit history. As the information in your credit report changes, your credit score updates. If you have paid your mortgage and other debts on time, then you likely have a sufficient credit score to qualify for a HELOC. If you have made late bill payments or have a history of financial difficulties, you may not have a high enough credit score needed for a HELOC and may not meet lenders’ HELOC credit score requirements.
Follow these tips to improve your credit score and build credit:
Apply for a credit builder loan. Credit builder loans have a term of six to 24 months, with amounts ranging from $300 to $1,000. After you are approved for the loan, the credit union or bank will deposit the full loan amount into your account. You’ll make monthly payments until the full amount is repaid. As you make on-time monthly payments, you build credit because all payments are reported to the credit bureaus. Upon satisfaction of the loan, the money will be released to you.

Make on-time monthly payments. This one factor can make or break your credit score. A creditor can report your late payment to the credit bureaus (Experian, Equifax, and TransUnion) once you're 30 days late, and the late payment can remain on your credit reports for up to seven years.
Pay down balances. Paying down and paying off credit card balances lowers your amount owed and credit utilization, which counts for 30% of your credit score.
Limit how often you open new credit accounts. When you apply for a credit card you may initially see a small drop in your credit score, due to a “hard inquiry” of your credit score that’s made by the creditor before issuing new credit. A hard inquiry may stay on your credit report for up to two years.
Ask for higher credit limits. While it may seem counterintuitive to increase your credit limit while you are trying to decrease debt and restore credit, a higher credit limit can lower your overall credit utilization ratio, making your credit score increase.
Become an authorized user on a credit card. When you become an authorized user on a family member’s credit card, the card issuer will send the primary card holder a credit card with your name on it, and the account is added to your credit report. Because the primary account holder is responsible for paying the charges on the account, the authorized user’s credit score benefits from the cardholder’s on-time payments.
Dispute errors on your credit report. You have a right to dispute any inaccuracies in your credit report. It does not cost anything to dispute errors and you don’t need to hire a credit repair company to do it for you. Resolving inaccuracies could increase your credit score. Federal law entitles everyone to a free copy of their credit report once every 12 months from each Credit Reporting Agency (also called a Credit Bureau).

Why Savvy Consumers Choose CU SoCal

For over 60 years, CU SoCal has been providing financial services, including HELOCs, car loans, personal loans, mortgages, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.

Please give us a call today at 866.287.6225 today to schedule a no-obligation consultation with one of our HELOC experts.

Get Started on Your Home Equity Loan Today!

Help + Support


Co-Browsing Code

Building Better Lives

Credit Union of Southern California (CU SoCal) is a leading financial institution empowering those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County to reach their goals and build strong financial futures. CU SoCal provides access to convenient money management services and offers competitive rates and flexible terms on auto loans, mortgages, and VISA credit cards—turning wishing and waiting into achieving and doing.


562.698.8326 | 866 CU SoCal Se Habla Español