Why the bank said no (it's not just the score)
HELOC underwriting stacks three filters: credit score, combined loan-to-value, and debt-to-income. The advertised rates you see assume roughly a 780 score, under 70% CLTV, and DTI under 45% — miss any one and the rate climbs; miss two and most banks decline outright. Damaged credit usually travels with a stretched DTI, which is why the decline letter cites both.
That matters because it tells you what to fix. If your score is 660 and your equity is thin, no alternative product saves you — you're borrowing against equity you don't have. If your score is 580 but you own 60% of a paid-down house, you have real options, because the equity itself is the collateral doing the work.
Five ways to tap equity with damaged credit, ranked
1. Home equity loan from a flexible lender
Down to ~620Fixed lump sum, fixed rate, fixed payment. Some non-bank lenders go lower on score than banks in exchange for a higher rate and lower maximum CLTV. You'll pay more than the person with a 780 — but it's a normal loan with a normal payoff schedule, which makes it the most predictable option on this list.
2. Home equity investment (HEI)
Down to ~500A company gives you cash today in exchange for a share of your home's future value — no monthly payment, no interest rate. Providers like Point accept scores around 500 and offer roughly $30,000 to $600,000 depending on your equity, with terms up to 30 years. The cost shows up at the end: when you sell, refinance, or the term ends, you pay back the investment plus a share of appreciation, and there's an upfront fee (around 3–4%). If your home appreciates strongly, this can end up expensive — if it's flat, it can beat everything else here. Run the exit math before signing, not after.
3. Personal loan (skip the collateral)
Down to ~580If you need less than about $30,000, consider not touching the house at all. Lenders like Upstart weigh education and employment alongside score, which helps thin or recovering credit. The rate will be higher than any equity product — that's the price of your house not being on the line. For amounts a personal loan can cover, that trade is often worth it.
4. Cash-out refinance
Down to ~580 (FHA)Replace your whole mortgage with a bigger one and take the difference in cash. FHA cash-out goes down to 580 in principle. The catch in 2026: if your current mortgage rate is low, this trades your good rate away on the entire balance to extract some equity — usually a bad deal. It only pencils if your existing rate is already high or your credit has improved since you got it.
5. Wait six months and fix the score first
The unpopular oneIf the need isn't urgent, this is the highest-return option on the page. Moving from 620 to 680 can cut an equity loan's rate meaningfully and reopens bank HELOCs entirely. The fastest levers: pay cards below 30% utilization, dispute any report errors, and add zero new inquiries. Our credit-building hub lays out the sequence.
The three questions that pick your option
How much do you need? Under $30k: personal loan first — keep the house out of it. More: equity products.
Can your monthly budget absorb a payment? If genuinely no — and that's common when credit is damaged, because the damage usually came from cash-flow stress — the HEI is the only structure on this list that doesn't add one. That's its entire reason to exist.
How fast is the deadline? No deadline: fix the score first, then borrow at the better tier. Real deadline: flexible-lender equity loan or HEI, decided by the payment question above.