Home equity loans for bad credit

What happened: Home equity loan (HEL) and home equity line of credit (HELOC) rates are at or near their 2026 lows, with average rates for both products extremely close, as of June 2, 2026. Despite needing better credit than a mortgage, some lenders approve HELs for scores as low as 620, though lower credit scores may result in higher interest rates.

Market impact: This narrative affects homeowners with lower credit scores who are considering leveraging their home equity. It also impacts lenders, who may see increased demand for HELs from these borrowers, potentially driving up their interest income. Competitive rates between HELs and HELOCs may prompt consumers to shop around, influencing lenders' market share.

What to watch next: Monitor the Federal Reserve's interest rate decisions in the coming months to assess their impact on HEL and HELOC rates. Additionally, track the housing market's performance, as changes in home values and demand for home equity products may influence lenders' risk appetites and approval standards for lower-credit-score borrowers.