Tilted Forum Project Discussion Community - View Single Post - Secured Credit Card vs. Home Equity Line of Credit

Stompy · 08-18-2004, 09:43 AM

What I don't get is why they still have to do a credit check, and how someone with bad credit could even get turned down: equity is equity.

The HOUSE is collateral, so if you show them "Hey, my house has 25k in equity" which is GUARANTEED payment for them, how and why would they turn you down?

A friend of mine and I went into the bank today to talk w/ a banker, and the banker said, "Since the collateral is your house, you could essentially burn the house down if you didn't want to pay the loan back, which would make it worth nothing". Haha, are they serious? And, uh, how the hell would your credit report determine THAT? So someone w/ bad credit will automatically burn their $150k+ house down to save paying $10,000? (On a side note, surprisingly enough, there weren't any catches. Everything is 100% paid for [appraisal, title fees, etc..] and the interest rate is 7%)

Doesn't seem right to me. Is that alone the reason they pull your credit, or... is there a real reason for it?

08-18-2004, 09:43 AM	#11 (permalink)
Stompy Banned from being Banned Location: Donkey	What I don't get is why they still have to do a credit check, and how someone with bad credit could even get turned down: equity is equity. The HOUSE is collateral, so if you show them "Hey, my house has 25k in equity" which is GUARANTEED payment for them, how and why would they turn you down? A friend of mine and I went into the bank today to talk w/ a banker, and the banker said, "Since the collateral is your house, you could essentially burn the house down if you didn't want to pay the loan back, which would make it worth nothing". Haha, are they serious? And, uh, how the hell would your credit report determine THAT? So someone w/ bad credit will automatically burn their $150k+ house down to save paying $10,000? (On a side note, surprisingly enough, there weren't any catches. Everything is 100% paid for [appraisal, title fees, etc..] and the interest rate is 7%) Doesn't seem right to me. Is that alone the reason they pull your credit, or... is there a real reason for it? __________________ I love lamp.