Bad credit home improvement loans have helped thousands of homeowners finance repairs around their house. Many have realized immediate increases in property values and have finally accomplished the American Dream.
Unfortunately getting a home improvement loan can be difficult for homeowners with bad credit. Lenders typically consider borrowers with a credit score under 640 to be high credit risks. While a poor credit history can be a major obstacle for consumers it is not impossible to find competitive bad credit home improvement loans.
Today online lenders offer bad credit home improvement loans to fund home repairs, small remodeling projects and appliance upgrades.
While bad credit personal loans usually have greater restrictions than other loan options there are many banks willing to offer competitive interest rates to high risk lenders. Homeowners can greatly benefit from shopping around for home improvement loans online.
Bad credit home improvement loans differ from standard bank loans in many ways:
- Higher Interest Rates
- Substantial Collateral Requirements
- Hidden Closing Costs and Fees
Qualifying for Bad Credit Home Improvement Loans
Bad credit home improvement loans are available only to select individuals. Many banks have strict requirements on lending to bad credit borrowers. Fortunately there are steps that consumers can take to improve the chance to qualify for an unsecured personal loan online.
Small steps such as reviewing credit reports and correcting errors can help homeowners increase their credit score. Other consumers may consider discussing their previous credit history with lenders during the application process.
Additionally, homeowners can pay down existing debt to improve their chance of getting a bad credit home improvement loan.
Borrowers should take these steps to qualify for a home improvement loan with bad credit:
- Review Credit Reports Annually
- Discuss Credit History with Lenders
- Pay Down Existing Debt
Reviewing Credit Reports
Homeowners with bad credit must take the time to review their credit reports each year for errors. A small mistake on a credit report could be the difference between getting approved or denied for a bad credit home improvement loan. The major credit agencies such as Experian, Equifax and Transunion are required to give one free credit report to consumers annually. These can be requested online at no charge.
Lenders carefully inspect credit reports to gauge a borrowers credit risk by looking at credit history and other factors. A homeowner with bad credit will want to look over their credit report before applying for a home improvement loan. Understanding what lender is looking for will be extremely helpful when trying to qualify for a new loan.
Openly Discuss Credit History
Homeowners that have encountered financial hardship are encouraged to discuss these problems with prospective lenders. A borrowers credit report may not tell an accurate story about their previous financial situation. Taking the time to effectively communicate with a lender can greatly increase a borrowers chance of getting approved for a bad credit home improvement loan.
Common financial problems that damage credit scores:
- Financial Difficulties
Considering Bad Credit Home Improvement Loan Alternatives
A homeowner with bad credit will encounter many obstacles on their way towards home improvement financing.
For instance traditional lenders require a substantial amount of collateral or even a down payment to guarantee the loan. Anyone with bad credit knows that it is nearly impossible to find enough collateral for this type of loan.
In addition, many bad credit lenders often charge ridiculous interest rates on home improvement loans.
To see the difference in your monthly payment when comparing lenders we recommend using our home improvement loan calculator. This will allow you to compare interest rates and monthly payments quickly.