Even if you've been bankrupt or have bad credit, you can still get a loan against the value of your home. There are institutions that serve this group, but rates of interest and terms are likely to be higher. There could also be extra charges. The lender may offer a low interest rate for a high down payment or vice versa. There are loans with fixed interest and loans with interest that changes over time. Up to thirty years may be given to pay back the loan.
Most of the time, lenders use reports from credit rating agencies like TransUnion, Equifax, and Experian, which together are known as FICO, to figure out a person's credit score on a scale from 300 to 900. These agencies look at things like how well you've paid your bills in the past, how recently you've applied for credit, and how much debt you have. If your score is less than 600, that means you are in the bad risk group. There is a chance that each FICO agency will give a different score to the same person. Some lenders get scores that are in the middle.
There are many ways to improve your FICO score. Some banks also offer help with your credit. Agencies approved by the U.S. Department of Housing and Urban Development (HUD) also offer free counselling, which includes a review of your financial situation. Some lenders might not care about FICO scores at all. In this case, the most you could borrow would be 70% of the net value. They might make the borrower pay off some of their other debts with the money they give them.
Find out what different lenders have to offer by doing some research. Don't take everything someone says at face value. Study them and ask questions. You don't need to be afraid of your current financial situation. And be careful. People would be waiting to take advantage of your situation, which seems hopeless.
