Best Home Improvement Loans with Bad Credit for 2022

If you are considered a subprime borrower and you are looking for financing to help complete some home improvement projects around the house, do not worry. There are still plenty of options and lenders who may be willing to work with you to help you obtain the financing you need. Technically, a credit score between 580 and 669, although it is still considered a credit score of a subprime borrower, it’s still a fair credit score. There are plenty of lenders who may still work with fair credit borrowers. So, when lenders see a fair credit borrower, what exactly does that mean to them?
Basically, a fair credit borrower, or a person with a credit score between 580 and 669, is someone who may have little to no credit history or someone who has some negative credit events on their credit history. Lenders may see a fair credit borrower as someone who poses some risk to default. Because of this risk, a fair credit borrower will most likely need to pay higher interest rates, higher fees, and will most likely only qualify for smaller amounts of credit than someone with a good or excellent credit score. A fair credit borrower may have some late payments on their credit history as well as possess a higher credit utilization rate. They may have a short credit history, or they may have a long history that includes one or more delinquent accounts. Additionally, they may already have a higher amount of total debt and a high number of credit inquiries in a short period of time. Last, they could have had a civil judgment or even a bankruptcy on their record from 5-plus years ago that is still lingering on their credit history. Even considering all this, there are many lenders who specialize in extending personal loans to individuals who would be considered a fair credit borrowers.
If you are a subprime borrower looking for home improvement financing with a credit score that is 579 or below, you may then be considered a bad credit borrower. Someone with a bad credit score, a score below 579, may find it difficult to borrow money since they are considered riskier than other borrowers and that there is always the likelihood that they will fail to make timely payments in the future. According to Experian, it is estimated that around 62% of borrowers with a credit score below 579 are likely to become seriously delinquent on their loans in the future. That being said, if you are on the higher end of the bad credit score spectrum, there are still some opportunities for you to obtain a home improvement loan. If you are approved for an unsecured personal home improvement loan, you may be subject to some of the highest interest rates available on the lending market as well as other fees. You may be able to work around those higher interest rates if you find a lender who allows you to apply for a personal loan with a cosigner or if they allow you to secure the loan with an asset you own. However, if a cosigner or using collateral is not an option, you may have to bite the bullet and pay interest rates that could end up in the high 20’s or low-to-mid 30’s percentage points. Depending on the size of the loan and the length of the loan repayment period, an interest rate that high may end up costing you a lot of money. You may have to ask yourself the difficult question of whether or not completing a home improvement project at this time is worth it and/or absolutely necessary. If you have some time to wait on the project, it may be in your best interest to take 4 to 6-months to work on improving your credit score to at least the fair credit category. Improving your credit score does not have to be difficult. By following these basic steps, you can hopefully begin to lift your credit score and see some noticeable results in 4 to 6-months.

Check and understand your credit score: The first step to improving your credit score is to see what you are working with. You are entitled to one free credit report from each of the three credit bureaus every 12-months. You can order your free copies of your credit reports online. Once you have your credit reports in front of you, compare all three to make sure there are no discrepancies or errors on any of the reports. If there are any errors, make sure to contact the credit bureaus to address those mistakes immediately. If there are no errors, but you do have some accounts sitting delinquent, you may want to reach out to the creditor or the collection agency handling the account to make an offer to resolve the account. If you do this, make sure you get everything in writing and that it also states that they will notify the credit bureaus that the account has been resolved. If you have a high amount of credit utilization, you may want to try to pay off one or two credit cards to bring that percentage down. By doing these types of actions and continuing to make your current payments on time, you could hopefully see a slight or dramatic bump in your credit score depending on how much you can accomplish. Understanding your credit score is something that you should prioritize as well.

Here is a quick breakdown of how your credit score is calculated.
Payment history (35%)
Credit utilization (30%)
Age of accounts (15%)
Credit mix (10%)
Recent hard inquiries (10%)

Make on-time payments: Since payment history makes up 35% of your credit score, during the time you are trying to boost your credit score, you should make every payment on time and in full.
Pay down debt: Since credit utilization makes up 30% of your credit score, during the time you are trying to boost your credit score, you should be putting every extra dollar that you have toward paying down existing credit card debt and discontinue using your credit cards altogether.
Avoid any new hard inquiries: During this time, do not apply for any new lines of credit.

By following the advice of these four main credit boosting tips, you may see some increase in your credit score in 4 to 6-months. If it is enough of an increase to see your credit score rise from the bad credit category to the fair credit category, it may help you qualify for a home improvement loan more easily and it may end up saving you money by helping you obtain a lower interest rate.

Whether you try to boost your credit score or not, there are still some lenders who are known for working with subprime borrowers with both fair and bad credit. Here is a list of some of those lenders you may want to consider if you find yourself in this type of credit situation.

Upgrade – score 560 and up

Top pick for: Subprime borrowers
Qualifications for bad credit borrowers: Subprime borrowers will need to have a minimum credit score of 560 to be considered for a personal improvement loan through Upgrade. If your credit score is below 560 or you have a really high debt-to-income ratio, Upgrade does allow the use of a co-borrower or co-signer to help you qualify for the loan. Additionally, Upgrade does offer a secured personal loan option as well where you can use an asset as collateral which may help lower interest rates and increase chances of qualifying. Personal loans through Upgrade range from as little as $1,000 to a maximum of $50,000. APRs range from 6.94% to 35.97% and there is a strong likelihood that you will see an origination fee somewhere between 2.9% and 8%. Also, loan repayment periods range anywhere from 3 to 7-years.
Pros:
Allows borrowers to use a co-borrower, co-signer, or collateral to increase their chances of qualifying and to help lock in a lower interest rate
Offers loans up to $50,000 with terms between 3 to 7-years
Rate discount of 0.5% for enrolling in autopay
Offers significant rate discounts to Upgrade checking account customers
Fast loan approval and account funding

Cons:
Loans come with an origination fee
Higher APRs

BestEgg – score 600 and up

Top pick for: Secured home improvement loans
Qualifications for bad credit borrowers: BestEgg is another lender option for subprime borrowers who are looking for a personal home improvement loan. BestEgg considers personal home improvement loan applications from potential borrowers who have a minimum credit score of at least 600. They offer 3 and 5-year loans for any amount between $2,000 and $50,000, depending on what you can qualify for. APRs range between 5.99% and 29.99% and each loan comes with an origination fee that could be somewhere between 0.99% and 6.99% of the total loan amount. For some subprime borrowers who may be a little below the 600 minimum credit score requirement or that may have another reason holding them back from qualifying for an unsecured personal loan, BestEgg does offer a secured loan option for homeowners to help put some borrowers qualify. .
Pros:
Offers a secured loan option for homeowners
Offers personal home improvement loans for up to $50,000
Reports all payments to the three main credit reporting agencies
Allows two changes to the payment due date for added flexibility
Loans are funded within 3-business days

Cons:
Charges an origination fee
No rate discount for autopayments
BestEgg is not available to customers living in IA, VT, WV, or Washington DC

Prosper – score 600 and up

Top pick for: Peer-to-peer lending
Qualifications for bad credit borrowers: Prosper is a peer-to-peer lending service that makes personal home improvement loans available by connecting investors with borrowers who have a minimum credit score of 600. Loan terms are only available for 3 and 5-years and APRs can range anywhere from 7.95% to 35.99%. Additionally, loans typically come with an origination fee between 2.41% and 5%. Prosper allows investors to fund any loan application for any amount between $2,000 and $40,000, however, if the loan is not at least 70% funded within 14-days, the application will be denied and the borrower will need to start the process again. That being said, most loan applications that are submitted by people who meet all the minimum criteria, typically see their loans fully funded within 3-days. It takes another 5 business days after approval to receive the funds in a personal account.
Pros:
Allows borrowers to prequalify with no impact on their credit score
Reports all payments to all three credit reporting agencies
Allows unlimited changes to the payment due date
Offers joint loans

Cons:
Longer loan approval and funding time than other online lenders
Charges an origination fee
No rate discount for autopay enrollment

OneMain Financial – score 600 and up

Top pick for: Borrowers with below-average credit
Qualifications for bad credit borrowers: OneMain Financial is another online lender that may be a good choice for subprime borrowers looking for personal home improvement loans with a credit score of 600 or higher. They offer 3 to 5-year terms on personal home improvement loans with APRs that can be anywhere from 8.98% to 36%. Additionally, OneMain Financial charges an origination fee of 1% to 10% or a flat fee of $500, depending on the state that you reside in. The minimum income requirement for a personal loan through OneMain financial is $7,200.
Pros:
Choose your own payment due date
Offers both joint and secured loans to help subprime borrowers qualify and possibly obtain lower interest rates
Quick loan approval and offers same or next business day funding
No early pay-off penalty

Cons:
Higher APRs
Charges an origination fee
No discounts for enrolling in autopayments

LendingPoint – score 600 and up

Top pick for: Below-average credit borrowers that need fast funding
Qualifications for bad credit borrowers: LendingPoint offers 2 to 4-year personal home improvement loans for amounts ranging from $2,000 to $25,000 to borrowers with a minimum credit score of at least 600. They do also require a minimum income of $30,000 along with the 600 minimum credit score requirement. APRS can range anywhere from 15.49% and 35.49% and each loan may come with an origination fee of up to 6%. Subprime borrowers who may be close to the 600 minimum credit score requirement are encouraged to prequalify with no impact on their credit score.
Pros:
Borrowers can change their payment due date once a year and they can pick any day of the month that works best for them
Allows prequalification with no impact on credit score
Loans are funded one business day after loan approval
No early pay-off penalty

Cons:
Charges origination fees of up to 6%
Doesn’t allow co-signers or joint loan applications
No rate discount for enrolling in autopayments

Can you get a home improvement loan with bad credit?

Yes, if you have bad credit, it may be more difficult for you to qualify for a personal home improvement loan, however, it is now impossible. With bad credit, you may simply just have fewer options in terms of lenders, you may be required to pay higher interest rates and fees, and if your credit is really bad, you may be required to have a co-borrower, co-signer, or collateral added to the loan. Interest rates for bad credit borrowers can sometimes reach up to 36%. Depending on the loan amount and the length loan repayment period, an interest rate of 36% can add a significant amount of costs to your loan. For example, for a simple 3-year $10,000 personal home improvement loan, if the loan comes with an APR of 35.99%, at the end of the 3-years, you may end up paying around $6,487.32 in interest alone. That is almost 65% of the principal. To prevent having to pay a ridiculous amount of interest, if you have a very low credit score, you may want to consider taking a few months to improve your credit score.

Should you get a home improvement loan with bad credit?

Ultimately, the decision is yours. However, if your home improvement project is not an emergency home repair, then you may want to consider holding off on the project until you can improve your credit score to at least the fair credit category. Any home improvement project like building a deck, installing a concrete patio, remodeling the kitchen, or putting on a small addition, can wait a while until you can improve your credit score. If your furnace goes out, a pipe bursts or your roof is leaking an incredible amount every time it rains, then you may not have the luxury to wait for your credit score to increase. If you have bad credit and you can afford to wait on your home improvement project, doing so could end up saving you thousands of dollars.

How to qualify for a home improvement loan with bad credit:

Check your credit score
Find a lender with a minimum credit score requirement that you meet
Get prequalified
Provide any necessary supporting documentation required
Get funded
Bad credit borrowers may want to consider improving their credit score before applying for a loan. However, if you need money now you can try to follow the steps above to get approved for a personal loan. If you have bad credit, you may find that the traditional avenues for acquiring a home improvement loan maybe not an option for you, or at least extremely difficult. Not to worry though. There are still several options for bad credit borrowers who need funds to complete either home repairs or home improvements. If you would like to use a bank, credit union, or online lender, you may have a better chance to qualify for a personal home improvement loan if you can have a co-borrower, co-signer, or use collateral to secure the loan.
A co-borrower is like a co-signer however they will also have access to the funds. If you should happen to be late on a payment, then the co-borrower may be held accountable to make the payment on your behalf. A co-signer follows the same exact formula, except they most likely do not have access to the funds and are simply responsible for the loan if you are unable to make the payments. Using collateral to secure a personal home improvement loan means that if you should happen to fall behind on payments, a lender has the right to repossess an agreed-upon asset and sell it to cover the loan balance.
Other than these three pathways to acquiring traditional home improvement financing as a bad credit borrower, there are a number of government loan programs that you could look into. A great government loan program that a bad credit borrower may want to research is the FHA 203k rehabilitation loan program. Borrowers can qualify for an FHA 203k rehabilitation loan with a credit score as low as 500. If you are a subprime borrower with a credit score between 500 and 579, then you can still possibly qualify for an FHA loan with a 10% down payment. Any borrower with a credit score of 580 or above can qualify for an FHA loan with a down payment of only 3.5%. Other government programs that bad credit borrowers may want to see if they qualify for include loan programs through Fannie Mae, HUD, the USDA, and the VA.

Home improvement loan alternatives for bad-credit borrowers:

Some alternative financing methods have emerged in the lending world that may be beneficial to bad credit borrowers. Some of those alternatives include. . .
Peer-to-peer lending
Micro-lending.
Micro-lending is when small lenders help bad credit borrowers with incremental loans. Although you may have to break up some of your home improvement projects into smaller milestones to qualify for micro-lending, it could be a great option for bad credit borrowers. The only downside is that your kitchen renovation may take two or three times as long to complete if you need to break it up into smaller projects to make financing easier. Peer-to-peer lending cuts out the financial institution. Instead, borrowers borrow directly from other individuals.

Will your rate be higher if you get a home improvement loan with bad credit?

Yes, there is a good chance that if you apply and get a personal home improvement loan that you will be required to pay higher interest rates than someone who applies and obtains the same loan and has good credit. Most lenders give their estimated APRs in the form of a range. For example, OneMain Financial explicitly states that its personal loans can come with an estimated APR that ranges from 8.98% to 36%. Typically, the 8.98% APR is reserved for borrowers who have the highest credit scores of 800+. If you have bad credit, then if you do qualify for a personal home improvement loan through OneMain Financial, then you may have an interest rate that is closer to the 30% to 36% end of the estimated APR spectrum.

What credit score do you need to get a home improvement loan?

Credit score minimum requirements for personal home improvement loans vary by lender. For example, check out the following minimum credit score from some of the most popular and trusted lenders on the lending market.

LightStream: 660
SoFi: 680
BestEgg: 600
Prosper: 600
Upgrade: 560
Axos Bank: 700
OneMain Financial: 600
LendingPoint: 600

Can I get a home equity loan with a 500 credit score?

The chances of getting a home equity loan through a private lender with a credit score of 500 are slim to none. However, you may be able to apply for and qualify for an FHA 203k rehabilitation loan with a credit score of 500 as long as you have a down payment of at least 10%.

Can you get a home improvement loan with a 600 credit score?

Yes, there are several online lenders who are willing to work with a potential borrower wanting a home improvement loan who has a credit score of 600. Some lenders include BestEgg, Prosper, Upgrade, OneMain Financial, and LendingPoint.

Can I get a renovation loan with bad credit?

Yes, depending on how bad your credit score is, there are still many private lenders and government organizations that are willing to work with you to help you acquire the funds necessary to renovate your home.