Best Bad Credit Home Improvement Loans Of 2023

Best Bad Credit Home Improvement Loans

Summary: Best Bad Credit Home Improvement Loans


We reviewed popular lenders based on 14 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose lenders that have a minimum credit score requirement of 600 or lower and ranked them based on the weighting assigned to each category:

  • Eligibility and accessibility: 30%
  • Loan cost: 25%
  • Loan details: 20%
  • Customer experience: 15%
  • Application process: 10%

Within each category, we also considered several characteristics, including loan amounts, repayment terms, APR ranges and applicable fees. We also looked at whether each lender accepts co-signers or joint applications and the geographic availability of the lender. Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like prequalification and mobile apps.

Where appropriate, we awarded partial points depending on how well a lender met each criterion.

To learn more about how Forbes Advisor rates lenders, and our editorial process, check out our Loans Rating & Review Methodology.

Tips to Compare Bad Credit Home Improvement Loans

When shopping around for a home improvement loan, here’s how to compare options:

  • Prequalify if you can. Many lenders now offer a prequalification form you can fill out to get a preliminary quote with loan interest rates and terms. Taking this step can help you scope out which loans you may be eligible for without hurting your credit score.
  • Compare APRs. A loan’s annual percentage rate (APR) is a percentage that expresses how much borrowing will cost you over time. APRs on personal loans typically range from 4% to 36%, with the lowest rates going to borrowers with stronger credit. Strategies like paying off existing debt could help improve your credit score before borrowing so you can qualify for a better interest rate.
  • Check for origination fees. Personal loans usually have upfront fees that are taken from your loan funds before you get the money, and it’s an extra cost to compare from one lender to the next.
  • Compare loan terms and monthly payments. Repayment terms usually range from one to seven years. Review your budget to see which loan term and repayment schedule best fits your needs.
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What Is Considered Bad Credit?

What’s considered bad credit depends on the credit scoring model. A FICO score of 580 or below falls in the poor range, and a VantageScore of 600 or below is considered poor.

However, lenders can set their own eligibility requirements and there are several, like those in this list, that are willing to loan money to those with credit scores between 560 and 600. Besides your credit, factors like your income and debt-to-income (DTI) ratio can affect whether or not you qualify for a loan.

Ways to Improve Your Credit Score Before Borrowing

Your payment history has the most significant impact on your credit score, so making on-time payments on credit cards and loans is crucial.

Your credit utilization is another key factor that’s considered when calculating your score. Credit utilization is the percentage of available credit you’re using, and it’s best to use no more than 30% of your total limit—even lower is better. Paying down balances or increasing your card limits are ways to lower your credit utilization, which could strengthen your score and help you get approved for a home improvement loan.

Lastly, run through your credit reports from each credit bureau to check for incorrect records. If your credit report has inaccurate information that’s hurting your score, you can file a dispute on the Experian, Equifax and TransUnion websites to have it removed.

How to Get a Home Improvement Loan With Bad Credit

If you have bad credit, these tips could help you qualify for a home improvement loan:

  • Find a creditworthy co-borrower. A co-borrower is someone who applies with you and shares financial responsibility for your debt, which reduces risk for lenders. If a lender accepts co-borrowers, having one added to your application could help you get approved with a better interest rate.
  • Try credit union loans. Credit unions may offer loans to members with flexible eligibility criteria. If you’re already a credit union member or within a credit union’s field of membership, consider seeing what loans are available.
  • Look for lenders with flexible credit requirements. Certain alternative lenders may be willing to accept borrowers with a limited credit history or a poor credit score. Minimum credit requirements aren’t always listed on a lender’s website, but shopping around and prequalifying could help you find a loan that fits your needs.
  • Pay down debt before borrowing. Lowering your debt balances can reduce your credit utilization and lower your DTI ratio, which could give you a better shot at getting approved for a loan.
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Bad Credit Home Improvement Loans vs. Home Equity Loans

Unlike unsecured home improvement loans, home equity loans are secured loans backed by the equity you have built up in your home. The collateral backing of this type of loan reduces risk for lenders, which is why secured loans tend to come with lower interest rates.

Lenders typically let you borrow up to 80% of your equity. However, what you can borrow depends on your income and credit. Some lenders may be willing to accept a credit score of 620 for a home equity loan, but a higher score can increase your chances of approval and improve your interest rate.

It’s important to note that your home could go into foreclosure if you can’t pay a home equity loan back. A home equity loan is not a good option if there’s any risk you can’t keep up with loan payments.

Other Options for Bad Credit Borrowers

Home improvement loans aren’t the only way to finance your next home project. Here are other options you could consider:

Assistance Programs

Homeowners with a low income may be able to qualify for financial assistance to pay for home improvement costs through community programs. The HOME Investment Partnerships Program, for example, is a homeowner rehabilitation initiative that helps owners make repairs and renovations. Rehabilitation assistance may include grants and affordable loans available to borrowers who have trouble qualifying for loans through private lenders.

Title I Property Improvement Loan

Title I Property Improvement Loans are loans backed by the government and help low- and moderate-income borrowers make upgrades that improve the “liveability and utility” of a home. This program lets you borrow up to $7,500 through an unsecured loan or up to $25,000 if your home secures the loan.

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While lenders will check your credit history for approval, there are no minimum credit requirements, so you may be able to qualify with less-than-perfect credit.

Family Loans

If you know someone in a financial position to lend money, the last resort could be asking for a loan to make repairs and upgrades to your home. However, family loans may have tax implications for the person lending if you borrow over $10,000.

Before going this route, be sure to get the terms, repayment schedule and interest rate in writing so both you and the person lending you money are on the same page about how the loan will be repaid.

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