Many or all companies we feature compensate us. Compensation and editorial research influence how products appear on a page. Personal Loans Home Improvement Loans With Bad Credit Updated Apr 09, 2024 14-min read Written by Sarah Sheehan, MAT Written by Sarah Sheehan, MAT Expertise: Tax planning, retirement planning, debt management Sarah Sheehan is a writer, educator, and analyst who focuses on the impact of health, gender, and geography on financial equity. Her ultimate goal? To live beyond the confines of chasing the next dollar—and to teach everyone else how to do the same. Learn more about Sarah Sheehan, MAT If you need work done on your home and have less-than-perfect credit, you can still get the funds you need for home repairs. You won’t even have to use your home as collateral, minimizing your risk if life happens. We’ll take a deep dive into the rates, fees, loan amounts, funding timelines, and requirements if you need a home improvement loan with bad credit. Table of Contents Skip to Section Best home improvement loans for bad creditHow to choose a home improvement loan with bad creditHome improvement loan application processAlternatives to home improvement loansAre there no-credit-check home improvement loans for bad credit?How to improve your credit scoreFAQ Best home improvement loans for bad credit Credit scores under 580 generally fall under the bad credit umbrella, while scores between 580 and 669 are considered below average, but fair. Bad or below-average scores may not keep you from qualifying for a loan, but they can make it harder. When you do qualify, you may not get the lowest interest rates available, and your personal loan fees could be higher, as well. That doesn’t mean you shouldn’t explore your options, though. You may just need to consider lenders you haven’t worked with before. After all, some of the best home improvement loans for bad credit come from lenders that may be new to you. Here are a few to consider: LenderMin. credit score*Rates (APR)Credible5507.49% – 35.99%Upgrade5808.49% – 35.99%UpstartNone7.80% – 35.99%*Collected March 2024 Best marketplace: Credible View Rates LendEDU rating: 5.0 out of 5 Loan amounts from $600 to $200,000Check eligibility without impacting credit Credible is an online marketplace that matches you with loans and lenders based on your credit profile and desired loan amount. You only have to submit one form to see if you’re matched with prequalified rates with Credible1. Credible lets you filter lenders by credit score range and loan limit. Then, you can view each lender’s eligibility requirements before applying. You’ll also see key highlights, like average funding time and required fees. This user-friendly platform makes Credible a top choice for borrowers across credit scores, including those with bad credit. Best for fair credit: Upgrade View Rates LendEDU rating: 4.9 out of 5 Offers job loss protection and hardship programsFlexible repayment options, including no prepayment penaltyAllows for joint applications Upgrade is an excellent home improvement loan option for borrowers with fair to bad credit. Upgrade does an initial soft pull on your credit, so you can check your rates without hurting your credit score. Upgrade offers loans up to $50,000, and once you’re approved, you could receive your funds by the next business day. You can also use Upgrade’s autopay discount to reduce your rate and save money on your loan. With Upgrade, origination fees are deducted from your total loan amount and range from 1.85% to 9.99%. Consider that added cost as you compare lenders. Best for thin credit: Upstart View Rates LendEDU rating: 4.8 out of 5 Innovative underwriting process considers employment, education, and income in addition to credit scoresReceive a decision within minutesFunding as soon as 1 business day after approval Upstart is unique because its lending model considers your education, employment, and bank account balance when determining eligibility. For instance, borrowers with little to no credit history can obtain a loan if they graduate within the year and have a job offer. Upstart also won’t reject your application outright if you apply for a too-high loan amount. Instead, it’ll show you loan amounts you do qualify for based on your application. This helps Upstart maintain its track record of 40% more approvals and 43% lower rates than traditional models. Part of that is due to Upstart’s lower fees: Origination fees range from 0% to 10%, and you won’t get hit with any penalties for paying off your loan early. How to choose a home improvement loan with bad credit Finding the right loan terms, rates, fees, and funding time can be challenging regardless of your credit score. Here’s how each of these elements can impact your borrowing experience—and how to ensure you get the best possible terms for your loan. Rates Interest rates are the most significant indicator of loan affordability, so comparing your options is essential. One tool in your arsenal is checking your APR before officially applying for a loan. Many lenders provide personalized rates with a soft credit inquiry, which allows you to compare rates without damaging your score through a hard credit pull. This isn’t the case for all lenders, so find out which kind of credit inquiry the lender performs before submitting your information. Also, prepare to upload documents, such as pay stubs, to verify your information. Your rate or approval could change if the lender can’t verify something. Terms It’s common to see terms for personal loans stretch from two to six years. If you get multiple options with different repayment terms, keep in mind the total cost of a loan will change based on the length of your repayment schedule. A longer term means a lower monthly payment, but you’ll pay more interest. The opposite is true for a shorter term. The table below shows how loan terms affect the monthly payments and total interest expense for a $10,000 loan with a 24.90% APR: TermMonthly paymentInterest expenseTotal amount paid 2 years$533.21$2,797.13$12,797.134 years$331.01$5,888.66$15,888.666 years$268.76$9,350.61$19,350.61 Fees The main fee for home improvement loans is a one-time origination fee. Origination fees can apply to every borrower, not just those with bad credit (but your fee could be higher based on your credit score). The state where you reside also affects your origination fee. An origination fee may make your loan more affordable, however. A lender offering a lower interest rate might charge a higher origination fee to cover the business costs. Some lenders take the fee out of the principal balance at origination, and others add it to your payments. Read More Common personal loan charges and fees Customer reviews Bad credit often makes borrowers vulnerable to predatory lenders. It’s helpful to research before committing to a loan agreement. Before you apply, check customer reviews on the following trusted resources: Better Business BureauTrustpilot Also, check whether our team has reviewed the company. We research many aspects of personal loans, including what customers say, and we take pride in offering unbiased personal loan reviews so you can make the best decision for your finances. Home improvement loan application process Many of today’s lenders offer online applications you can complete in a few minutes. Better yet, many will perform a soft inquiry, giving you a good idea about the amount you’ll qualify for and your rate without pulling your credit. Here’s how it works: Gather your proof of income and identity. Having documents like your I.D. and pay stubs ready before you apply will save you time and help you get a decision faster.Prequalify on the lender’s website. Checking your rates online usually only takes a couple of minutes. You’ll input information like your name and address, as well as the last four digits of your Social Security number. You may also need to state how much you want to borrow and how you plan to use your loan.Select a loan option. Your lender may present you with more than one loan offer. Consider each one’s rates and terms, and use our payment calculator to compare borrowing costs. When you’re ready, choose the option that best fits your needs.Agree to a hard credit check. Prequalifying only involves a soft pull, but if you decide to submit a full application, you’ll need to consent to a hard credit check before you can proceed.Provide income and identity verification. In this step, you’ll provide more thorough information, like your full Social Security number. You’ll also upload the documents you gathered previously. This step is usually the longest step, depending on how many documents you need to upload and if you already have them saved digitally.Wait to hear from your lender. Some lenders offer immediate approvals, while others may take a business day or two to give you a decision. Sign your loan agreement. If you’re approved, your lender will send you a copy of your loan details. Review this document carefully, and if all looks good, sign the agreement to receive your funds.Get your loan disbursement. Once your paperwork is signed, your lender will get to work disbursing your loan proceeds. Many lenders send your funds via ACH transfer, and it could take a couple of days for the funds to clear. From start to finish, expect the home improvement loan application process to take two to five days. That includes waiting for a final decision from your lender and waiting for your loan funds to be available in your bank account. Alternatives to home improvement loans A home improvement loan isn’t the only funding option available. You may also want to consider funding your project with your home equity, a credit card, or a USDA loan. AlternativeWhat it isConsiderationsHome equity loans / HELOCsLump-sum loan or revolving credit line based on value of your home equityHome serves as collateralCredit cardsRevolving credit line with a fixed limit and no collateral requirementsMay not cover costs of home improvement projectUSDA loans and grantsLow- or no-interest home improvement funding for select borrowersMust meet income and residency requirements Home equity loans and lines of credit Home equity loans and home equity lines of credit (HELOCs) allow you to leverage your home equity to pay for your home improvement project. Your home serves as collateral, so you may find better approval odds and lower rates—but you risk losing your home if you fall behind on payments. In most cases, you’ll need at least 15% equity in your home to be eligible for these financing tools. They often come with larger loan amounts, though, and if you’re approved for a HELOC, you can withdraw funds as needed should you uncover additional home improvement needs. Just like with home improvement loans, specific lenders provide home equity loans for bad credit. If you’ve built up enough equity, need to fund a large or ongoing project, and are confident you can make your payments, tapping into your home equity may be a wise choice. Credit cards In some cases, you might be able to use a credit card to fund your home improvement project. If you choose a credit card, be sure your interest rate is lower than you’d get with a personal home improvement loan. You also want to be sure your card has a sufficient credit limit. Applying for a new credit card with poor credit presents many of the same roadblocks as applying for a loan, and one of those is getting approved for enough credit to fully fund your project. Unlike with many home improvement loans, applying for a credit card always results in a hard inquiry. Be aware that this can further lower your score, potentially making it more difficult to find alternative financing if the credit route doesn’t pan out. USDA home improvement loans and grants USDA loans aren’t just for buying houses. If you qualify for the USDA’s Section 504 Home Repair program, you can use USDA loan funds to improve a property you own. This program also offers grants for homeowners age 62 or older. To be eligible, you must live in a rural area and the home you want to improve. Investment properties or vacation homes don’t count. You must also meet income requirements, which depend on your household size and county of residence. USDA home improvement loans are capped at $40,000 and grants at $10,000. Loan interest rates are far lower than you’ll find with most other lenders, too: Regardless of your credit score, you’ll pay a 1% fixed rate over 20 years, regardless of your credit score. Are there no-credit-check home improvement loans for bad credit? If you’re confident you won’t get approved for a traditional home improvement loan or don’t want to run your credit, no-credit-check options are available. They come with certain risks, however. For starters, no-credit-check loans are often riddled with fees. Interest rates can be astronomical, as well. That combination makes it almost impossible to repay your loan without getting trapped in a debt cycle. Some no-credit-check lenders are more reputable than others, though. Possible Finance, for example, has APRs up to 200%, but it offers 30-day forbearance options if you run into payment issues. How to improve your credit score Home improvements aside, working on your credit score is wise regardless of an immediate need for credit. It can allow you to take advantage of better rates and terms, as well as make financing purchases or projects more manageable and affordable. If you can delay your home improvements for a few months, you may be able to raise your credit score enough to improve your odds of approval and a lower interest rate. The following steps can help you improve your score: Request and review a copy of your credit report, ensuring all information is valid and contesting anything that looks wrong or inaccurate.Pay your bills on time, every time.Decrease your credit utilization by paying down debt.Use credit cards responsibly. Credit cards can improve your credit by increasing the total credit availability, but only if you keep your balances low and pay on time. FAQ Are there guaranteed home improvement loans for bad credit? Typically when people refer to guaranteed loans for people with bad credit, they talk about payday loans or title loans. These forms of lending can be dangerous, and we don’t recommend using them. That’s because they come with sky-high interest rates—often triple-digit—and require you to use valuable resources like your paycheck or car as collateral. If you have bad credit, being wary of your approval odds with a traditional lender is understandable. However, it’s not worth further jeopardizing your financial security. Before resorting to guaranteed-approval loans, explore your options with lenders that offer more reasonable terms. Can I get home improvement loans with bad credit and no equity? Yes, borrowers can get a home improvement loan with bad credit and no equity. Home improvement loans are unsecured personal loans and don’t require your home equity as collateral. Because home improvements aren’t secured, getting approved depends on other factors, such as your credit score, debt, income, and loan amount. What credit score do I need to get a home improvement loan? The minimum credit score needed to get a home improvement loan varies from lender to lender. Many lenders don’t specify a minimum credit score but emphasize that debt, income, credit history, and loan amount are crucial to their lending algorithms. Upstart, for example, doesn’t state a minimum score. Upgrade accepts scores down to 560, and Credible offers loans for borrowers with 550 scores and above. How much can I borrow for a home improvement loan? Each lender has unique lending criteria for approval. You can generally borrow as much as your debt-to-income ratio (DTI) will afford you, up to the lender’s limit. Some lenders cap their loan amounts, regardless of a borrower’s credit profile and DTI. If you need a larger home improvement loan, prioritize lenders with larger maximum loans or search Credible for lenders with higher loan limits. How much more expensive is a home improvement loan with bad credit than good credit? A home improvement loan can cost thousands more if you have bad credit. When you have good credit, financing terms are generally more favorable and save you significant money. Consider a $10,000 home improvement loan with five-year terms. Take a look at the table below to see how your borrowing cost changes depending on your APR: APRMonthly paymentTotal interest costTotal paid7.99%$202.72$2,162.97$12,162.9716.99%$248.47$4,908.32$14,908.3224.99%$293.45$7,607.28$17,607.2835.99%$361.27$11,675.90$21,675.900%$0$0$10,000 (from cash savings) It’s clear how much more costly a loan with a high APR is. Note that you’ll save thousands of dollars in interest compared to saving up to pay for a $10,000 cash home improvement. Recap of bad-credit home improvement loans LenderCredit scoreRates (APR)Credible550+7.49% – 35.99%Learn moreUpgrade5808.49% – 35.99%Learn moreUpstartNone7.80% – 35.99%Learn more 1 Prequalified rates are based on the information you provide and a soft credit inquiry. Receiving prequalified rates does not guarantee that the Lender will extend you an offer of credit. You are not yet approved for a loan or a specific rate. All credit decisions, including loan approval, if any, are determined by Lenders, in their sole discretion. Rates and terms are subject to change without notice. Rates from Lenders may differ from prequalified rates due to factors which may include, but are not limited to: (i) changes in your personal credit circumstances; (ii) additional information in your hard credit pull and/or additional information you provide (or are unable to provide) to the Lender during the underwriting process; and/or (iii) changes in APRs (e.g., an increase in the rate index between the time of prequalification and the time of application or loan closing. (Or, if the loan option is a variable rate loan, then the interest rate index used to set the APR is subject to increases or decreases at any time). Lenders reserve the right to change or withdraw the prequalified rates at any time.