Why credit matters more on a second loan
A home equity loan sits behind your first mortgage. If a home were ever sold to repay debts, the first mortgage would be paid first. That extra risk means lenders lean heavily on your credit history to set the rate.
In general, the stronger your score, the lower the rate you'll be offered. Pricing often steps up or down in score bands, so a modest gain can sometimes move you into a better tier.
What lenders look at
- Credit score: your track record of paying debts on time
- Combined loan amount: your first mortgage plus the new loan, compared with your home's value
- Debt-to-income ratio: your monthly debts compared with your gross monthly income
- Loan amount and term: what you borrow and for how long
- Property type and use, such as a primary residence or second home
CapCenter's minimum
You need a credit score of at least 620 for a CapCenter loan. Meeting the minimum doesn't set your rate by itself. CapCenter's posted rates assume a credit score of 780 or higher unless noted, so a lower score may mean a higher rate or an added cost.
Your loan consultant can show you how your score affects your quote.
Borrowing less can help
The less you borrow compared with your home's value, the more equity stays in the home, and the lower the lender's risk. The maximum depends on the loan type and purpose, and a loan consultant can tell you yours. Borrowing a little less than the maximum may improve your price.
Ways to improve your price
- Pay down credit card balances, which can raise your score quickly
- Pay all bills on time in the months before you apply
- Check your credit reports and dispute any errors
- Avoid opening new credit right before you apply
- Pay off a small debt to lower your debt-to-income ratio
Compare the full cost
Look at the rate and the fees together. CapCenter's home equity loans come with ZERO Closing Costs (restrictions apply), so with no lender closing costs, the APR sits very close to the rate. That makes it easier to compare offers side by side.