Home Improvement Loans for People With Bad Credit

Are you thinking about making your home better with a loan but worried about your bad credit history? You’ve come to the right place. This guide is designed to help you understand the process of getting a home improvement loan, even if your credit isn’t the best.

Each month, nearly 7,000 people visit our website seeking advice about secured loans. You’re not alone in this journey.

So, let’s take a step-by-step look at:

•  What a home improvement loan is
•  How to choose between secured and unsecured loans
•  The best way to compare quotes and pick the right deal
•  The role of your credit score and how to improve it
•  And how to use a home improvement loan calculator

We understand that loans can be a bit hard to get your head around. That’s why we’ve tried to make this guide as clear and simple as possible.

We’re here to help you make the right choices and get the home improvement loan that suits your needs. Let’s find out just how much a home improvement loan could cost for you.

Home improvement loans 

A home improvement loan is a personal loan where the funds are used to make home improvements and renovations. It is not uncommon for loans to be available for specific purposes, such as debt consolidation loans and car loans. 

Home improvement loans are provided as a lump sum and paid back through monthly repayments over a fixed period with interest. There are two types of home improvement loans, either as a secured or unsecured loan.

Secured home improvement loans

A secured home improvement loan is when the loan includes an asset used as collateral in case you do not repay. Common assets used to secure a home improvement loan are vehicles, property and home equity. 

If the individual does not repay the loan as per the credit agreement, the lender can repossess the asset. If the loan is secured against your property equity then they may ask you to sell your home to repay, which is similar to a home equity loan but they’re not exactly the same. 

The benefit of these secured loans is that the lender is usually able to offer more credit and/or a lower interest rate due to the added security of an asset listed as collateral. 

Unsecured home improvement loans

An unsecured home improvement loan is a loan that does not have any asset listed as collateral within the credit agreement. This means not repaying doesn’t automatically give the creditor the right to repossess an asset or sell your home. 

However, not repaying unsecured loans can still result in these outcomes if the lender decides to take you to court and needs to enforce the debt with bailiffs or a charging order. 

Will I be eligible for a home improvement loan?

Lenders will have different initial eligibility criteria that any home improvement loan applicant must meet. You are likely to be of a certain age – typically 18 or 21 – and be a homeowner with or without an ongoing mortgage. 

Just like any other personal loan application, the lender will need to assess your individual circumstances, including your existing debt and income. They will also assess your credit rating to see how you have handled your money and debt repayments in the past. 

It is the accumulation of this information that will decide your application. 

Home improvement loans for all purposes

• Stuck paying high interest on credit card debts & loans?
• Looking to fund a home improvement project?
• Dreaming of finally taking the once-in-a-lifetime trip?

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Can you get a home improvement loan with bad credit?

It is possible to get a home improvement loan if you have a bad credit score. These are sometimes named and advertised as bad credit home improvement loans to attract people searching for them with a poor credit history online. 

When you get a home improvement loan with bad credit, the lender may restrict the loan amount available and increase the interest rate of the loan. They do this because the credit history suggests you are a lending risk and may not keep up repayments as agreed.

Not getting the interest rate or ideal terms should make you think carefully about whether this is the best credit option for your needs. You could always get the support of a debt charity. 

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What does my credit score have to be to get a home improvement loan?

Lenders can assess any loan application with their own assessments, meaning there is no fixed credit score that will pass for home improvement loans. However, it is highly recommended that you have a minimum credit score from 650 to 700 to be successful.

You may be able to get a home improvement loan with a slightly lower score if you are securing the loan with an asset to reduce your lending risk.

How to get a bad credit home improvement loan

There is no guarantee of getting a home improvement loan. But there are things you can do to improve your chances. Here are some pointers:

1. Look for advertised home improvement loans for bad credit (however, you should also consider the APR representative example)
2. Try to save before so you can apply to borrow a smaller amount
3. Try to improve your credit score with the pointers mentioned earlier
4. Don’t apply for lots of home improvement loans at once

Bad credit home improvement loan examples

You are more likely to find a bad credit home improvement loan advertised through online lenders over high-street banks and renowned building societies. At the time of writing, these lenders are advertising bad credit home loans, which are subject to status and change. 

The providers below are listed as examples only and you should consider all of the market options before applying.

• Ocean Finance
• Likely Loans
• Pegasus Personal Finance
• Norton Finance 

Consider guarantor home improvement loans

An alternative option to a bad credit home improvement loan is a guarantor loan, especially if you do not have assets or home equity. This is where the loan is secured against the guarantor’s legal responsibility for repayments, or even their assets. Thus, if you do not repay your guarantor must repay on your behalf. The guarantor is usually a family member but may need to own their own home.