A home equity loan is very similar to personal bank loan. According to Wikipedia a home equity loan (sometimes abbreviated HEL) is a type of loan in which the borrower uses the equity in their home as collateral. These loans are useful to finance major expenses such as home repairs, medical bills or college education. A home equity loan creates a lien against the borrower’s house, and reduces actual home equity (a lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. The owner of the property, who grants the lien, is referred to as the lienor and the person who has the benefit of the lien is referred to as the lienee).
Even if you have a bad credit you can get an equity loan. Lenders will approve a home equity loan because there is a collateral, the loan is secured by the property. On the otherhand obtaining an equity loan with a low credit score the lender may ask a higher mortgage rate.