If you need work done on your home but you have less-than-perfect credit, fewer options and higher APRs can make financing the project seem discouraging. But we’ve researched options to get the necessary resources to make it work.
If you need a home improvement loan with bad credit and no equity, you can look for a home improvement loan. This type of unsecured personal loan means you don’t use your home to secure the loan. This can mean a higher interest rate, but it also means your home won’t be at risk.
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.
In this guide:
- Best home improvement loans for bad credit
- How to choose a home improvement loan
- Home improvement loan application process
- Alternatives to home improvement loans
- Improve your credit score
- FAQ
- Recap of bad-credit home improvement loans
Best home improvement loans for bad credit
Some of the best home improvement loans for bad credit come from lenders that may be new to you. The following lenders offer among the most competitive personal or home improvement loans for borrowers with bad credit.
Best for fair credit: Upgrade
Editorial rating: 4.9 out of 5
- Offers job loss protection and hardship programs
- Flexible repayment options
- Allows 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 shows borrowers several terms and corresponding payments, which can give you repayment flexibility. The APRs below include the origination fee, which is between 1.85% and 9.99%.
Once Upgrade accepts your application, you could get loan proceeds as soon as the next day.
- Rates (APR): 8.49% – 35.97%
- Loan amounts: $1,000 – $50,000
- Credit score: 560+
- Soft credit pull to check rates? Yes
- Deposit time: As soon as the next day
- Origination fee: 1.85% – 9.99%
- Late fee: $10
- Repayment terms: 24 – 84 months
Best for thin credit: Upstart
Editorial rating: 4.8 out of 5
- Innovative underwriting process considers employment, education, and income in addition to credit scores.
- Most applicants receive a decision within minutes and get funds as soon as 1 business day after approval.
- No prepayment penalties.
Upstart is an online lending platform that partners with banks to provide personal loans you can use for almost anything, including home improvement. Upstart’s lending model is unique because it considers education, employment, and amounts in your bank account when determining eligibility. A borrower with little to no credit history can obtain a loan if they graduate within the year and have a job offer.
If you apply for an amount that’s too high to qualify for, Upstart will come back with a lower amount you are eligible for instead of rejecting your application outright. Upstart touts 43% lower rates than traditional models.
- Rates (APR): 6.7% – 35.99%
- Loan amounts: $1,000 – $50,000
- Credit score: None
- Credit score category: Fair, bad
- Soft credit pull to check rates? Yes
- Deposit time: Next business day
- Origination fee: 0% – 10%
- Late fee: $15 or 5% of past due payment
- Repayment terms: 36 or 60 months
Best for changing payment date: LendingPoint
Editorial rating: 4.9 out of 5
- Uses a proprietary data-driven approach to evaluate borrowers based on various factors beyond credit scores, such as income, employment, and financial history
- Choose your monthly payment date
- Can make biweekly payments
LendingPoint is a financial technology lender that combines data models with artificial intelligence-driven insights to get a better picture of who you are as a borrower beyond your credit score. LendingPoint can offer different loan options to borrowers and grant access to funding within two business days, which is helpful if you need money right away for a home repair.
LendingPoint offers soft credit checks, which can give you an idea of how much it can loan you and at what interest rate. This is helpful for borrowers with lower credit scores because it doesn’t lower your credit score to look for the right financing for your project.
Loan amounts are generally from $2,000 to $36,500, but if you apply on the business side through your contractor, amounts range from $500 to $20,000. LendingPoint loans are not available in Nevada or West Virginia.
- Rates (APR): 7.99% – 35.99%
- Loan amounts: $2,000 – $36,500
- Credit score: 580+
- Credit score category: Fair, poor
- Soft credit pull to check rates? Yes
- Deposit time: As soon as the next business day
- Origination fee: 0% – 8%
- Late fee: Depends on the lender
- Repayment terms: 24 – 72 months
How to choose a home improvement loan with bad credit
Finding the right loan terms, rates, fees, and funding time can be challenging. Borrowers with less-than-perfect credit have fewer options and often pay higher interest rates. However, you can consider the following to ensure the best possible terms available.
Rates
Interest rates are the most significant indicator of loan affordability, so comparing your options is essential. One tool in your arsenal is checking the APR you will get. Many lenders provide personalized rates through a soft credit inquiry, which allows you to compare rates without damaging your score with a hard credit pull.
Remember, this is not the case for all lenders, so find out which kind of credit inquiry the lender performs before you submit your information. Also, you must verify the information you provide (often by uploading documents such as pay stubs). 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.
You can see in the table below how a loan term affects both the monthly payment and the amount you’ll pay in interest over the life of the loan. A longer term means a lower monthly payment, but you’ll pay more interest.
| Loan amount | APR | Term | Monthly payment | How much you pay in interest | Total amount paid |
| $10,000 | 24.90% | 2 years | $533.21 | $2,797.13 | $12,797.13 |
| $10,000 | 24.90% | 4 years | $331.01 | $5,888.66 | $15,888.66 |
| $10,000 | 24.90% | 6 years | $268.76 | $9,350.61 | $19,350.61 |
Fees
The main fee for home improvement loans is a one-time origination fee. If a lender charges origination fees, they 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. 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.
Check customer reviews on the following trusted resources:
Also, check whether our team has reviewed the company. We research many aspects of personal loans, including what customers say.
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.
When you begin the application process, you might need to provide several essential pieces of information about yourself to get a preapproval.
They may include the following:
- Address, phone number, and email address
- Birthdate
- Loan amount
- Loan purpose
- Employment and income information
- Monthly debt obligations
Once you complete the initial application, you might see several loan options to choose from. After selecting your loan, complete the application by providing documents to verify your information. These may include pay stubs or tax returns, housing payment information, a valid ID, and bank account information.
Sometimes, you may find you can improve your approval odds by adding a qualified cosigner to the loan application, but not all lenders allow this. Adding income and credit history from an eligible borrower may help with approval.
Alternatives to home improvement loans
A home improvement loan isn’t the only funding option available. You may also want to look at what it takes to fund your project with a home equity loan or credit card.
Home equity loan
This type of loan allows you to leverage your home equity to secure the funds necessary for your improvement project. Specific lenders provide home equity loans for bad credit. Since it’s considered secured debt, you may find better approval odds and lower rates, but you risk losing your home if you can’t make payments.
In most cases, you’ll need at least 15% equity in your home before you can apply for a home equity loan or home equity line of credit.
Credit card
In some cases, you might be able to use a credit card to fund your home improvement project. But a poor credit score can cause similar roadblocks to securing approval.
If you choose a credit card, be sure your interest rate is lower than you’d get with a personal home improvement loan. Be aware that applying for a credit card always results in a hard inquiry, which can further lower your score. It can be beneficial to research credit cards for bad credit before you apply.
Depending on the cost of your home improvement project, you may not find a card with a sufficient credit limit to afford what you want to do.
Improve your credit score
Home improvements aside, working on your credit score is often wise regardless of an immediate need for credit. It can allow you to take advantage of better rates and terms and can make financing any purchase or project 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 overall balances low and pay on time.
FAQ
Can I get a home improvement loan 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 use the equity in a home to secure it. Getting approved for a home improvement loan 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?
Here’s a sample of the three lenders highlighted in this article on the credit score required for a home improvement loan.
Several lenders don’t specify a minimum credit score but emphasize that debt, income, credit history, and loan amount are crucial to their lending algorithms.
| Lender | Minimum credit score needed |
| Upgrade | 560 |
| Upstart | None |
| LendingPoint | 580 |
How much can I borrow for a home improvement loan?
Each lender has unique lending criteria for approval. In general, you can borrow as much as your debt-to-income ratio will afford you, up to the lender’s limit.
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 a significant amount of money.
Take a look at the table below, which compares the most favorable APRs for home improvement loans with the least.
| APR | Loan amount | Term | Monthly payment | Total interest cost | Total paid |
| 7.99% | $10,000 | 5 years | $202.72 | $2,162.97 | $12,162.97 |
| 16.99% | $10,000 | 5 years | $248.47 | $4,908.32 | $14,908.32 |
| 24.99% | $10,000 | 5 years | $293.45 | $7,607.28 | $17,607.28 |
| 35.99% | $10,000 | 5 years | $361.27 | $11,675.90 | $21,675.90 |
| 0% | $0 | 0 years | $0 | $0 | $10,000 (from cash savings) |
It’s clear how much more costly a loan with a high APR is. Note that when compared with saving up to pay for a $10,000 cash home improvement, you’ll save thousands of dollars in interest.
Recap of bad-credit home improvement loans
| Lender | Credit score | Rates (APR) | Loan amounts |
| Upgrade | 560+ | 8.49% – 35.97% | $1,000 – $50,000 |
| Upstart | None | 6.7% – 35.99%% | $1,000 – $50,000 |
| LendingPoint | 580 | 7.99% – 35.99% | $2,000 – $36,500 |