heloc after ch.7

[hopeful316]

has anyone ever applied for a heloc after a ch.7 discharge and was approved?

[justbroke]

I don't see how anyone would be approved for a HELOC right after a Chapter 7. HELOCs are very risky products and typically have higher rates. Traditionally, a HELOC (one not done as part of a 80/20 financing package) would require the applicant to have a FICO score no less than 680. I would think someone just coming out of Chapter 7 would likely not have such a score.

The recent bankruptcy on the credit report is going to make it a little more difficult. You also need to consider your LTV/CLTV (loan-to-value/combined loan-to-value) and your DTI (debt-to-income). The score and the recent bankruptcy will be the major hurdles.

If you let the bankruptcy season and get your middle score into the 700s, it may be possible.

[hopeful316]

I was just wondering because I got an offer from several credit unions in the mail. I know that I have equity in my home now and it wouldn't hurt to have money in case of emergency. But I understand what you mean. I was discharged two years ago. I have no credit cards, but I am an authorized user on one credit card and my credit score is about 680. I was reading online outside the forum that some lenders would give a heloc due to the fact that you can't file for another 8 to 10 years again, which I never want to do again and that because the heloc is tied to your home they can take it if you're not able to pay back, unlike an unsecured credit card.

[justbroke]

To qualify, they will have you qualify on the score first (that's the first gate), and then, likely they'll look at your Equity (LTV/CLTV) and your debt (DTI). If it's a credit union, they may not even look beyond your score -- in other words, if the "middle" FICO 8/FICO Mortgage score is over 680, they may not even look at the factors that make your score 680 (such as the bankruptcy). It really depends on the lender.

So, since it has been 2 years, that means you have some seasoning of the bankruptcy and I would expect the (middle) score to be over 680. If you are getting pre-screened offers, then you probably passed the "score" issue. The other issues are the LTV/CLTV, DTI, and maybe the bankruptcy (they may want a reason why you filed).

Good luck!