How to Get a Home Improvement Loan With Bad Credit

Do you want to modernize your space or renovate your home? If so, you'll likely need a loan to complete the project. Some homeowners use their own money for home improvement projects, or they rely on credit cards. However, credit cards have high finance fees, and some people don't have a sizable savings account, which means they'll need a home improvement loan. Getting a home improvement loan with good credit is relatively easy. But if you have a low credit score, there's a higher chance of loan denial. Still, it's possible to obtain a home improvement loan with bad credit. The key is comparing loans and meeting the bank's requirements.

Step 1

Increase your credit score. If your credit score is below 600, attempt to improve it before applying for a bad-credit home improvement loan. Adding 20 or 30 points doesn't result in good credit. However, the higher your credit score, the lower your interest rate. A person with a 580 credit score might qualify for a 14 percent interest rate, whereas a person with a 610 credit score might obtain an 11 percent interest rate.

Step 2

Secure the loan. To obtain a home improvement loan with bad credit, you'll need some type of collateral or security. This can include any piece of valuable personal property. Some applicants use a vehicle title, electronics or jewelry. If you own a home, inquire about a home equity-home improvement loan. You can borrow money from your equity and use the funds to improve your living space.

Step 3

Use a co-signer. Collateral isn't always enough, and if you have bad credit, the lender might require a co-signer. Choose someone with a good credit history, and make sure the person understands the co-signing arrangement. If you default on the home improvement loan, they're automatically obligated to repay the funds.

Step 4

Find a lender that offers bad-credit loans. Many lenders don't offer bad-credit home improvement loans. To find one that does, use a loan broker. They work with various lenders, and they're generally able to connect you with a bank or finance company that offers loans to people with less-than-perfect credit. In addition to collateral and a co-signer, these lenders may require a down payment.


Borrow only what you need to complete the project. Even if the lender approves you for a larger amount, keep the loan balance small.


Be careful with home equity loans. These create a second lien on your property, and if you default, the home improvement lender can take possession of your home.

Things You'll Need

  • Credit score

  • Collateral

  • Co-signer