A home-equity line of credit works a lot like a credit card. The account has a set credit limit and the owner can usually borrow as much or as little as needed. Many credit lines charge a variable rate of interest, much like a credit card. The amount paid in finance charges depends on the direction of the prime rate.

However, unlike an unsecured revolving credit-card debt, the line of credit is almost always secured by home equity. For some homeowners, if a financial crisis hits and they can’t pay back the home equity line of credit (HELOC), they could lose their house.

Before applying for a line of credit, applicants need to make sure they are getting a good deal. That means checking up on their credit scores. In today’s financial environment, only consumers with excellent credit and substantial home equity will qualify for the best rates. The closer to a score of 700 you come makes you a better borrower in this marketplace. Generally, consumers need a credit score of 740 or higher to get the best deals.

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