High Risk Guaranteed Credit Card Home Equity Loans

If you have bad credit, guaranteed home equity loans may not be possible to obtain. You might give up on the idea if you think your credit is horrible but there are some things you might do to increase your chances of obtaining this type of loan.

You may think your credit rating is worse than it is. Obtain a copy of your credit report from each of the three major credit bureaus and go through the reports carefully.

Are there errors that need to be corrected? Are there old and outdated pieces of information that you might challenge and have removed from your credit file?

If your credit rating is marginal you may be able to improve that all important three digit credit score by making a few simple changes in accounts or paying more than the amount due on credit cards for a few months.

Know the Options Available

Guaranteed home equity loans with bad credit may sound like the perfect option for paying off high interest credit debt. However, you are exchanging unsecured debt for secured debt as a home equity loan uses your home as collateral for that loan.

Other loans options might also be available if you can improve your credit score or find it is not as bad as you believed. A personal signature loan from a bank where you are known as a responsible person or from a family member who understand your plight might be a better option to choose.

If the home equity loan is the best choice, compile a list of potential lending institutions. Some banks specialize in providing guaranteed home equity loans to those with bad credit that have a significant amount of equity available. Do not fill out multiple applications for loans as this can damage your credit rating further.

To a lender, multiple loan applications appear to indicate a consumer desperately trying to access large amounts of money rather than someone who is managing debt through obtaining a loan.

Choose an amount to borrow that is enough to meet your needs but avoid adding on extra money for a spending spree. In most cases, you can borrow up to 80% of the market value of your home. That percentage is based on the total amount of the first mortgage and the new second mortgage.

A common practice in recent years has been to allow homeowners to obtain a home equity line of credit that ends up with them owing a total of 100-125% of the value of their property.

This practice began during a time when home prices across the country were rising rapidly year after year. Today, lenders have pulled back from allowing such high percentage loans for those with bad credit.


If your credit is very bad the only home equity loans available to you will be through the sub-prime lending market. If the lender is reputable this may still be your best option for guaranteed home equity loans.

When you obtain a HELOC (which is a second mortgage) to pay off high interest credit card debt you may be solving a financial crisis and putting yourself on a path to better money management. However, if you continue to use your charge cards after obtaining a loan to pay them off you may compound your problems.

Think carefully about your options (try to avoid high risk loans) and your spending habits in the future before turning unsecured credit debt into a secured loan on your personal home.

The foreclosure rate has been reaching new heights annually for the past five years. Many of those foreclosures are caused by second mortgages that increased mortgage payments beyond the homeowner’s ability to pay.

If you default on a credit card debt you may be taken to court or may be forced to file bankruptcy. Even when filing bankruptcy you will be able to keep your home in most instances.

If you take guaranteed home equity loans and find yourself unable to make the loan payments, a cross default clause in that second mortgage can force you into foreclosure and you may lose your home.


Guaranteed home equity loans for bad credit are still available today from some lending institutions. These may be sub-prime loans but even those will carry lower interest rates if you have high APR credit accounts.

Proceed with caution and choose a reputable bank before applying for such a loan. Understand the need to stop using the credit cards and avoid creating future debt.

Read the fine print on any mortgage document before signing to understand the requirements you must meet to avoid the risk of foreclosure.