How to Get an Equity Loan With No Credit Check

Getting approved for a home equity loan or line of credit can be difficult if you have poor credit or no credit history. Many lenders will check your credit score before approving you for a home equity loan. However there are some options available if you need to leverage the equity in your home but don’t want your credit checked.

What is a Home Equity Loan?

A home equity loan is a type of second mortgage that allows you to borrow against the equity in your home. Equity is the difference between what your home is worth and what you owe on your mortgage. For example if your home is worth $300,000 and you have $200000 left on your mortgage, you have $100,000 in equity.

With a home equity loan, you can tap into that equity to get a lump sum of cash The loan is secured by your home, meaning if you default the lender can foreclose You’ll pay back the loan over a fixed term, usually 5-30 years, with a fixed interest rate.

A home equity line of credit (HELOC) works similarly, except you have a revolving credit line you can draw from as needed. HELOCs have variable interest rates.

Why Lenders Check Your Credit for Home Equity Loans

When you apply for a home equity loan or HELOC, the lender will check your credit score and history to assess your creditworthiness. They want to ensure you have a track record of responsibly paying back debt.

In addition, your credit score gives the lender an idea of how likely you are to default on the loan. The higher your credit score, the less risk you pose.

Lenders will typically pull your credit from the three major credit bureaus – Equifax, Experian, and TransUnion. They look for:

• Your credit utilization ratio
• Payment history
• Derogatory marks like collections, bankruptcies, or foreclosures
• Age and mix of credit accounts
• Recent credit inquiries

Borrowers with very good credit (scores over 760) can qualify for the lowest home equity loan rates, starting around 5%. A score of 680-749 is still considered good credit and may qualify you for a rate around 6-8%.

With a score under 620, you will likely pay a much higher interest rate or be denied altogether. This is when looking for no credit check equity loan options can be beneficial.

How to Get a Home Equity Loan Without a Credit Check

If you want to leverage equity in your home but don’t want your credit checked, here are a few options to consider:

1. Ask your existing lender

If you already have a mortgage, you may be able to get a home equity loan or HELOC from your existing lender without going through another credit check. This is because they already have your information on file and have been receiving your mortgage payments.

This works best if you’ve had your mortgage with them for several years and have a solid payment history. It still helps to have decent credit, even if they don’t check it again.

2. Look for alternative lenders

There are some specialized mortgage lenders that offer home equity loans without a credit check. These are often referred to as “asset-based lenders” because they focus more on the equity you have in your home rather than your credit scores and history.

Some examples of lenders that may offer no credit check home equity loans include:

• LoanDepot
• Axos Bank
• Unison Lending
• Lima One Capital

Keep in mind that while they may not check your credit, you’ll likely need to meet other strict criteria like:

• Significant equity in your home
• Low debt-to-income ratio
• Proof you can afford the new loan payment

You may also pay a higher interest rate than with traditional lenders. Do your research to find reputable lenders with reasonable rates and fees.

3. Try peer-to-peer lending

Peer-to-peer lending networks like LendingClub allow investors to fund loans for borrowers. Investors get higher returns while borrowers get lower rates than traditional loans.

These lenders focus more on your ability to repay than your credit scores. If you have equity, a stable income, and low debt, you may be able to qualify for a P2P home equity loan without a credit check.

Rates are comparable to traditional loans, starting around 5-6% APR. You’ll need at least 20% equity in your home to qualify.

4. Use home equity loan comparison sites

Comparison sites like LendingTree allow you to fill out one form and receive loan offers from multiple lenders. On these sites, you can search specifically for “no credit check” home equity loan options.

Filling out the form doesn’t guarantee approval, but it lets you shop among lenders willing to consider applicants with challenged credit. Some offers may still include a soft credit check.

5. Talk to a mortgage broker

An experienced mortgage broker has relationships with many lenders and can help match you with ones that offer loans without checking credit. They have access to programs you may not find researching lenders on your own.

Brokers may also be able to negotiate with lenders to waive certain requirements that you can’t meet. There is usually no charge for having a broker help you find loan options.

What to Expect with a No Credit Check Home Equity Loan

While possible to get a home equity loan without a credit check, keep these expectations in mind:

• You’ll need to prove significant equity, like 50% or more in most cases. The more equity the better.

• Income and assets will be closely scrutinized to ensure you can afford the payments. Expect to provide tax returns, bank statements, and other financial docs.

• Rates may be 0.5 to 1% higher than loans from traditional lenders.

• Some lenders may do a “soft” inquiry that doesn’t affect your scores. But a full tri-bureau hard pull is unlikely.

• You’ll have a higher chance of approval if you’ve owned your home for 5+ years and have a clean mortgage repayment history.

• Loan amounts may be lower than if your credit was checked. Expect loan-to-value ratios of 50% or less.

• Total monthly debt payments including the new loan payment should not exceed 45% of your gross monthly income.

• Upfront costs may be higher because of the increased risk some lenders take. Make sure to compare offers.

While it requires some extra effort, there are home equity loans available if you want to avoid the credit check requirement. If you have significant equity built up, steady income, and can show you manage debt responsibly, you still have a chance of approval.