Did you know your credit score could make or break your chances of tapping into your home’s equity? Many homeowners are surprised to learn how much weight lenders place on this three-digit number. When applying for a home equity line of credit, also known as a HELOC, your credit profile becomes a major factor in the approval process. Whether you want to renovate your home or consolidate debt, a strong credit score opens doors to better rates and higher approval odds. This guide explores five practical tips to boost your credit score and increase your chances of getting approved for a HELOC.
1. Check Your Credit Report for Errors
One of the simplest ways to improve your credit score is by reviewing your credit report. Mistakes happen more often than you’d think—anything from outdated account information to incorrect balances can negatively impact your score.
Request a free copy of your credit report from the three major credit bureaus: Experian, Equifax, and TransUnion. Go through each section carefully and dispute any errors you find. Even a minor correction could give your score a noticeable boost.
2. Lower Your Credit Card Balances
Your credit utilization ratio—how much of your available credit you use—plays a big role in determining your score. Lenders generally like to see this ratio below 30%. The lower it is, the better.
Paying down credit card debt is one of the fastest ways to improve your credit health. If paying it all off isn’t realistic, try to at least reduce your balances to stay within that ideal range. You can also consider asking your credit card provider for a higher limit to improve your ratio, just be sure not to add more debt afterward.
3. Avoid Opening New Credit Accounts
When you’re preparing to apply for a HELOC, it’s wise to avoid opening new lines of credit. Every time you apply for a new credit card or loan, it triggers a hard inquiry, which can temporarily drop your score.
Multiple inquiries in a short period can signal financial stress to lenders. Instead, focus on maintaining your current accounts and paying them responsibly. Stability is key—showing that you’re managing your existing credit well is more impressive than constantly seeking new credit.
4. Make All Payments On Time
Payment history is the most critical factor in your credit score—it makes up 35% of your FICO score. One missed or late payment can hurt your score and chances of HELOC approval.
Automate payments or schedule reminders to prevent late fees by always paying on time. Even if you can only pay the minimum, consistency builds trust with lenders. Over time, a solid payment track record shows you’re reliable, which is exactly what HELOC lenders seek.
5. Keep Old Credit Accounts Open
You might be tempted to close old or unused credit accounts, but doing so can hurt your credit score. The age of your credit history contributes to your overall score, and older accounts show a longer track record of responsible credit use.
Unless an account has high fees or puts you at risk of overspending, it’s usually best to leave it open. A well-aged account helps increase the average age of your credit, which lenders like to see when considering your home equity line of credit application.
Improving your credit score is one of the smartest moves you can make when preparing to apply for a HELOC. From checking your credit report to keeping old accounts open, every small step adds up. These habits improve your approval chances and help you secure better interest rates and terms. AmeriSave understands the value of financial preparation—and your future self will thank you for the effort.
