Most financial institutions will let you borrow as much as 80% of the Loan-to-Value (LTV) of your home (real estate)less any outstanding mortgage debt on your property. However, some institutions may allow you to use up to 100% of the equity in your home. There are a variety of home equity loan products available, each with their own terms and conditions. The equity is collateral you can use when borrowing against your home and is calculated as follows:

How Much Credit is Available to You

Calculations - Purchase Appraised value of your home - $300,000 Borrowing percentage* - 80% Percentage of appraised value - $240,000 Less existing mortgage debt - -$100,000 Potential credit line - $140,000 * Actual percentages may vary depending on the lender and borrowed amount.

When considering your available credit line, the lender may take into consideration other factors including your past credit history, your current income, and your ability to repay a loan. After your credit history has been evaluated, a report will be generated which includes your credit score and lets lenders know which loan is best suited for you.

Maintaining a good FICO score

Your credit score is calculated by the Fair Isaac Corporation (FICO), which accesses the three main credit reporting bureaus (Equifax, TransUnion, and Experian). Credit scores can range from as low as 300 points to as high as 850. People with average credit usually score around 620, good credit at 660, and excellent credit above 720.

Anything less than good credit, such as a car repossession or bankruptcy, may fall into the sub-prime category, which usually puts borrowers into a higher interest rate category. Once approved, borrowers can withdraw money up to the available amount, usually by check or credit card.

You can build and maintain a good credit score by always paying your bills on time, and by keeping a good utilization ratio. This means using less credit than is actually available to you. FICO scores are based on your rating in five general categories: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and types of credit used (10%) (Source: www.myfico.com). Whether you are new to using credit, or have been a long-time borrower, keeping these categories in mind and maintaining responsible borrowing habits can help you strengthen your credit score.