Key takeaways

  • You can get approved for a home improvement loan with a bad credit score, but it’s likely that you’ll pay a high interest rate.
  • Borrowers with bad credit are more likely to be offered smaller loan amounts.
  • It’s best to build up your credit score before applying for a home improvement loan.

A large home improvement project like a kitchen remodel or a total roof repair may come with a hefty price tag that requires financing. However, those with fair or bad credit — a FICO score below 670 — may have a harder time getting approved for a home improvement loan.

That said, there are lenders that offer bad credit loans for home improvement. These loans can help you get the funding you need to complete your renovation project, although it’s common for these lenders to charge higher-than-average rates.

Best home improvement loans with bad credit

OneMain Financial

4.4
Learn more

  • OneMain Financial offers fairly small unsecured loans for borrowers with bad and fair credit. Secured loans are also available if you’re willing to provide collateral. However, rates start higher with OneMain than with many other lenders.

  • Green circle with a checkmark inside
    Pros
    • Secured loans available.
    • Joint applications allowed.
    • Quick funding.
    Red circle with an X inside
    Cons
    • Low maximum amount.
    • Several fees and high rates.
    • Limited availability.

Upstart

4.8
Learn more

  • One of Upstart’s biggest draws is the fact that it has extremely generous credit requirements. Scores as low as 300 — the lowest possible — can still potentially qualify for a loan with Upstart. It factors in other information, such as education and employment, when determining eligibility. The maximum loan amount is also $50,000, so you can potentially fund a bigger home improvement project.

  • Green circle with a checkmark inside
    Pros
    • No minimum credit score.
    • Next-day funding available.
    • High maximum amount.
    Red circle with an X inside
    Cons
    • Potentially high origination fee.
    • No co-borrowers.
    • Only two loan terms available.

Avant

4.7
Learn more

  • If you have bad credit, you may qualify for a home improvement loan through Avant. It offers a mobile app for tracking your payment history and getting reminders on upcoming due dates. Avant also has customer support available seven days a week in case you need assistance with your application or loan.

  • Green circle with a checkmark inside
    Pros
    • Low minimum credit requirement.
    • Mobile app for loan management.
    • Customer service available all week.
    Red circle with an X inside
    Cons
    • Potentially high origination fee.
    • No co-borrowers.
    • Limited availability.

How to get a home improvement loan with bad credit

While lenders are more lenient with a bad credit home improvement loan, the steps you go through are largely the same as any other personal loan.

  1. Know your credit: To narrow down your list of lenders, check your credit score. Make sure you’re meeting the lender’s minimum requirements and look over your credit report for errors.
  2. Review your finances: Your credit score is important, but it’s just one aspect lenders consider. Your income, debt-to-income (DTI) ratio and other bills may affect your approval chances.
  3. Compare lenders: OneMain Financial, Upstart and Avant are all good starting points. However, most personal loans can be used for home improvement. Compare multiple lenders to see which you qualify for.
  4. Prequalify: Many lenders allow you to preview your rates before you commit. This lets you check your rates — and calculate monthly payments — without impacting your credit score.
  5. Submit your application: Once you’ve prequalified with at least three lenders, you’ll have a good idea of possible loan terms. If they work with your budget, you’ll need to submit financial documentation and finalize the application.

Tips to improve your credit score before borrowing

Having bad credit could be a hurdle when it comes to qualifying for a home improvement loan. These three tips may help boost your scores enough to avoid a bad credit home improvement loan.

  • Pay your bills on time: Making at least the minimum payments on all your outstanding loans and credit cards on time is key to creating and maintaining a positive repayment history.
  • Lower your debt: Paying down as much of your monthly balance as you can and reducing your card usage is the easiest way to improve your credit score. However, don’t close the account — that will have an adverse effect on your credit.
  • Add a co-signer: Some lenders allow you to apply with a co-signer or co-borrower. If the other person has a stronger credit score or higher income, it may improve your odds of being approved for a larger amount or better rates.

Keep in mind that there’s no magic fix for building your credit. It will take some time. If your home improvement project can wait, you may be able to score higher rates or more favorable terms with a better score.

Home improvement financing alternatives for bad credit

If you’ve built up a good amount of equity in your home, you may want to consider home equity financing options for bad credit versus personal loans.

Home equity loans and lines of credit come with tax benefits when you use the money on a home improvement.

However, there are two major drawbacks. The amount you can borrow is based on your equity — so it may not be enough to cover bigger projects. More importantly, your home is on the line. If you default, your lender is legally able to take your home.

Because of the risk, home equity products often have lower rates. You may be able to find a lender that works with bad credit, especially if you have a strong income and an established relationship with the lender.

Home equity loan

A home equity loan is a type of second mortgage you can take out on your home to pay for home improvement project expenses. Recent spikes in mortgage rates make them about as expensive as personal loan rates, especially if you have bad credit.

Home equity line of credit (HELOC)

A HELOC is like a home equity loan except instead of disbursing the funds in a lump sum, it acts as a revolving credit line that works like a credit card. HELOCs come with variable rates, but many offer interest-only options at first to keep your payment low. A HELOC is good if you have ongoing improvements and aren’t sure how much you’ll need — or when you’ll need it.

Read more: The best home improvement loan apps

The bottom line

If you need to fix up your home before you have the time to work on your credit score, you have bad credit home improvement loan options.

Read up on the pros and cons of home improvement loans before applying. This can help you determine if you can afford the monthly payments, both now and in the long term. Although you’ll pay more, the extra interest may be tax deductible if you go for a home equity product. The renovations could also boost the value of your home, which means you’ll make a bigger profit if you sell it.

If taking out a loan with bad credit is not the right idea for you, consider other ways to pay for home improvements.