Equity Loans With Bad Credit: 3 Areas Your Application Should Focus On

The high level of stress that is often associated with applying for equity loans with bad credit is hard to avoid. Such loans are usually large sums, and repaying them is expected to be a challenge. However, waiting for news of approval or rejection is perhaps more nerve-wrecking.Thankfully, there are a few areas that, if known and understood, can help to clear up the whole mystery over the application process. They can also indicate in advance whether securing loan approval is likely or not. And with some preparation, even an indication of a weak equity loan application can be turned into a stronger one.The Credit Report is ImportantIt is widely believed that there is little value in knowing the details of your credit report, but this is not true. When it comes to applying for equity loans with bad credit, it can provide a clear indication of where the application needs to be strengthened. When the reasons for the score being low are known, an effective strategy can be adopted.For example, it could be that fines associated with old loans have not been paid. But by simply paying them off, the score can be improved. When the scores improve, the chances of securing loan approval are increased by quite some margin. Perhaps late repayments are behind the low score, but preparing a sound reason for these blips may help convince the lender.Finally, the score itself may be incorrect. It has happened that loans cleared recently have not been taken into account. Asking for a review before applying for an equity loan, could mean an increased chance of success.Know Your Home LTVLTV stands for Loan-To-Value ratio, and is one of the most important calculations involved in the whole application process. Whether seeking an equity loan with bad credit or good credit, the lender wants to know what percentage of the value of the home is not covered by the balance of the existing mortgage.Hopes of securing loan approval rest more squarely on the shoulders of the LTV than on any credit score. The reason for the importance is that lenders set a strict percentage limit - usually 80% - to ensure that the loan cannot exceed the value of the home, thereby making the security worth less than the loan.The basic idea of the system is that, if a home was purchased using a $200,000 mortgage about 10 years ago, then as much as $100,000 will have been cleared off the balance.  And 80% LTV loan means that a maximum equity loan of $80,000 can be secured against that $100,000 equity.Find the Right LenderWith the amount of money involved, there is no point in signing up to the first lender willing to accept your application for an equity loan with bad credit. Not every lender is able to offer the best deals, so it is worth taking some time to search around.Of course, the best place to look is on the internet with most online lenders offering hard-to-beat deals. However, it is also worth speaking to your current mortgage provider. The chances of securing loan approval can be increased thanks to the fact that they already know the applicant. They know their character, their credit history and the property in question.While an equity loan can provide vital cash to alleviate difficult financial situations, it should never be rushed into. Remember, with interest rates, saving just $100 in repayments per month could mean savings of $10,000 over the lifetime of the loan.