Bad credit can increase the difficulty that a homeowner encounters
when seeking a home equity line of credit. Bad credit can be the reason for a
poor credit score.

What is a credit score? The credit score varies between the values
of 300 and 850. The credit score is the creation of the Fair Isaac Corporation.
Lenders who arrange for a home equity line of credit use the credit score in
order to set the interest rate that will be charged the homeowner.

Homeowners with a low credit score will need to pay higher
interest payments. A score above 700 is assurance of good interest rates. The
credit score also serves as an indicator of whether or not a lender should
accept a homeowner’s application for credit. Decisions on credit limits for the
homeowner are likewise based on the homeowner’s credit score.

The credit score is a function of the homeowner’s past line of
credit. In the U.S.,
three different agencies keep a record of each consumer’s line of credit. Those
agencies are Experian, TransUnion and Equifax. If a homeowner with a low credit
score wants to raise that score, then the homeowner must contact each of those
three agencies.

The effort to overcome a record of bad credit and to raise a
credit score requires the contesting of false claims that money is owed. If the
homeowner can prove that the claim for money is spurious then the homeowner has
an opportunity to raise his credit score. This action should be taken if the
homeowner who plans to seek a home equity line of credit has a score less than
640. Such a score would be a sign of bad credit.

The contesting of a credit score is not like a shot in the dark. A
survey of credit reports in the U.S.
showed that 80% of such reports contained mistakes. Thus, a homeowner could
have good reason to question the credit score that is being used to determine
the interest rate on a home equity line of credit.

The credit score for a couple, a pair that are joint homeowners,
is based on three credit scores from the person with the most sizable income.
This is the score that the homeowner needs to make correct. Such correction may
require a written statement to each of the above-mentioned agencies. Those
agencies will then contact the homeowner and indicate if more information is
necessary. If the homeowner is lucky, then the credit score will be increased
and the interest rate for the desired home equity line of credit will be
lowered.

Once the homeowner has a good credit score then he will want to
avoid slipping back into that region of bad credit. This means that the
homeowners must avoid the sort of spending that carries them to the borders of
their credit limits.