Home Improvement Loans With Bad Credit
Home improvement projects can be costly but having below-average credit can make it difficult for some to qualify for home improvement loans. Fortunately, there are a variety of lenders who offer them to people with bad credit.
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Regardless of what’s prompted your home improvement project, the total cost of it will depend on a variety of factors, including your access to affordable labor and supplies. Some projects, like upscale kitchen remodels, can cost in excess of $60,000, while others, like minor bathroom updates, may be substantially less.
Loans are often used to cover these costs, but the best home improvement loans are often saved for borrowers with good or excellent credit. If you have below-average or even bad credit, you may be concerned about finding personal loans for these kinds of expenses, but fortunately, there are options available.
On this page:
- Home Improvement Loans for Bad Credit
- Choosing a Home Improvement Loan if You Have Bad Credit
- Home Improvement Loan Application Process
- Alternatives to Home Improvement Loans
- Improve Your Credit Score
Home Improvement Loans for Bad Credit
The following lenders offer some of the most competitive personal or home improvement loans for borrowers with bad credit.
Upgrade
Rates (APR)
7.99% – 35.97%
Loan Amounts
$1,000 – $35,000
Credit Score
620+
Upgrade is a great home improvement loan option for borrowers with bad credit. Since Upgrade does an initial soft pull on your credit, you can check your rates without hurting your credit score. Once your application is accepted by Upgrade, you could receive loan proceeds as soon as the next day.
- Soft credit pull to check rates: Yes
- Deposit time: As soon as the next day
- Origination fee: 2.9% – 8%
- Late fee: $10
- Repayment terms: 36 or 60 months
Upstart
Rates (APR)
8.41% – 35.99%1
Loan Amounts
$1,000 – $50,0002
Credit Score
600+
Upstart is an online lending platform that partners with banks to provide personal loans that can be used for almost anything. Upstart’s lending model considers education, employment, and many other variables when determining eligibility.3 This model leads to 27% more approvals and 16% lower rates than traditional models.4
- Credit score category: Fair, bad
- Soft credit pull to check rates: Yes
- Deposit time: As fast as one business day
- Origination fee: 0% – 8%
- Late fee: $15 or 5% of payment
- Repayment terms: 36 or 60 months
Choosing a Home Improvement Loan if You Have Bad Credit
Previously, it was extremely difficult to find a home improvement loan if you had bad credit. But as the online lending market grows, there are more options for borrowers who may have below-average credit. Though the options are still not as plentiful as those for borrowers with good or excellent credit, qualifying for a loan is far easier.
That said, finding the right loan can be an exhaustive process when it comes to evaluating terms, rates, and other factors to find the most affordable product for your needs. Here are a few things to keep in mind as you shop around:
Rates
Interest rates are the biggest indicator of loan affordability, so it’s important to compare your options. 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. However, this is not the case for all lenders, so find out which kind of credit inquiry will be made before submitting your information.
Terms
The longer your loan term, the more interest you’ll pay over the life of the loan. However, shorter loan terms typically mean higher monthly payments, so you’ll need to weigh those factors carefully. Select a term that will result in a manageable payment amount that fits in your budget, as late payments will further damage your credit score.
Fees
In many cases, home improvement loans for borrowers with bad credit will include origination or administration fees. Always factor this fee into the total cost of the loan when comparing lenders.
Further, it’s also important to find out when and how the fee will be applied. Some lenders will take it out of the principal balance at the time of origination while others will add it to your payments.
>> Read More: Common Personal Loan Charges and Fees
Customer Reviews
Bad credit often makes borrowers vulnerable to predatory lenders. As such, it’s helpful to do some research before committing to a loan agreement. Check customer reviews or use websites like LendEDU to find out more about your potential lender.
Home Improvement Loan Application Process
Many of today’s lenders offer online applications that can be completed from the comfort of your own home. You’ll likely be required to provide the following:
- Valid ID
- Proof of income (tax returns or paystubs)
- Valid address, phone number, and email address
- Bank account information for funding purposes
If you have bad credit, you may find that lenders require you to provide additional information or go through additional steps, like meeting with a loan counselor.
In some cases, you may also find that you can improve your odds of approval by adding a qualified co-signer to the loan application or be choosing a secured loan, which will require you to put up collateral (e.g., car, home, boat, etc.). Of course, both scenarios carry their own set of risks, so it’s important to weigh your options and understand the potential implications should you default on the loan.
Alternatives to Home Improvement Loans
Home improvement loans aren’t the only funding option available, and as you consider your options, you may want to look into the following alternatives.
Home Equity Loan
This type of loan allows you to leverage your home equity to secure the funds necessary for your improvement project. There are lenders who provide home equity loans for bad credit, and since it’s considered secured debt, you may find that approval odds are higher and rates are lower, although risk losing your home if you become unable to make payments.
In most cases, you’ll need to have at least 15% to 20% 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; however, you may find that not having good credit can cause similar roadblocks to when it comes to securing approval.
If you do choose a credit card, be sure your interest rate is lower than what you’d get with a personal home improvement loan. Furthermore, applying for a credit card always results in a hard inquiry, which can further lower your score. As such, it’s beneficial to research a few 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, improving your credit score is generally a smart idea regardless of an immediate need for credit. It will allow you to take advantage of better rates and terms and can make financing any purchase or project easier and more affordable.
In some cases, you may need to start on a project or replace a major appliance immediately, leaving you with little time to address your credit score. However, if you can delay your home improvements for a few months, you may be able to raise your credit score just enough to improve your odds of being approved and securing 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 use them responsibly and keep your overall balances low.
Bottom Line
Securing a personal loan with bad credit, including a home improvement loan, can be difficult. However, there are numerous online lenders that offer loans specifically designed for borrowers with less-than-perfect credit histories. The key to finding the right one is reviewing the rates and terms available and understanding how the loan payment will factor into your monthly budget.
In some cases, particularly if the repairs don’t need to be made immediately, it may be best to hold off as you take steps to improve your credit in hopes of improving your odds of approval and securing better loan terms later.
Recap of the bad credit home improvement loans above
| Lender | Credit Score | Rates (APR) | Loan Amounts |
| Upgrade | 620+ | 7.99% – 35.97% | $1,000 – $35,000 |
| Upstart | 600+ | 8.27% – 35.99%1 | $1,000 – $50,0002 |
*If approved, the actual loan terms that a customer qualifies for may vary based on credit determination, state law, and other factors. Minimum loan amounts vary by state.
1The full range of available rates varies by state. The average 3-year loan offered across all lenders using the Upstart platform will have an APR of 21.97% and 36 monthly payments of $35 per $1,000 borrowed. For example, the total cost of a $10,000 loan would be $12,646 including a $626 origination fee. APR is calculated based on 3-year rates offered in the last 1 month. There is no down payment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application.
2Your loan amount will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will qualify for the full amount. Loans are not available in West Virginia or Iowa. The minimum loan amount in MA is $7,000. The minimum loan amount in Ohio is $6,000. The minimum loan amount in NM is $5100. The minimum loan amount in GA is $3,100.
3Although educational information is collected as part of Upstart’s rate check process, neither Upstart nor its bank partners have a minimum educational attainment requirement in order to be eligible for a loan.
4Approval numbers compare the 2020 loan approval rate by the Upstart model and a hypothetical traditional credit decision model. The APR calculation compares the two models based on the average APR offered to borrowers up to the same approval rate. The hypothetical traditional model used in Upstart’s analyses was developed in connection with the CFPB No Action Letter access-to-credit testing program, is trained on Upstart platform data, uses logistic regression and considers traditional application and credit file variables.model).
