Borrower options: Home improvement loans with bad credit

by Stephen Laska 04/01/2024

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A good credit score is a basic requirement for traditional home loans, but can you get home improvement loans with bad credit? Home improvement loans meant specifically for remodeling, renovating or repairing your home have similar financial requirements, but can offer a bit more flexibility. Here are the important things to know:

What credit score is needed for a traditional home improvement loan?

Lenders generally require a minimum credit score of 660-700 to qualify for a home improvement loan. While some approve lower scores, the trade-off is usually a much higher interest rate on the loan.

Can I get a renovation loan with bad credit?

The Federal Housing Administration (FHA) offers loans for borrowers with lower credit scores. If you need financing with lower credit, both the FHA 203(k) renovation loan and FHA Title I loan programs are worth investigating.

How can I borrow against my house with bad credit?

To borrow against your house, you need to take out a home equity loan or a home equity line of credit (HELOC). These options use your home as collateral, and allow you to borrow money against the total value. Home equity loans are better for large, one-time projects, while a HELOC is more helpful for funding smaller ongoing projects.

How to build up your credit to get a home improvement loan?

The best ways to build and increase your credit score are to:

  • Enable automatic bill pay to guarantee on-time payments.
  • Avoid "hard checks" on requests for new credit cards or loans.
  • Improve your debt to income ratio.

Unfortunately, improving your credit score won't happen overnight. If you're in need of a time-sensitive renovation, consider these options for obtaining financing - regardless of your credit history.

About the Author
Author

Stephen Laska

As a RE/MAX® agent, I’m dedicated to helping my clients find the home of their dreams. Whether you are buying or selling a home or just curious about the local market, I would love to offer my support and services. I know the local community — both as an agent and a neighbor — and can help guide you through the nuances of our local market. With access to top listings, a worldwide network, exceptional marketing strategies, and cutting-edge technology, I work hard to make your real estate experience memorable and enjoyable. I look forward to the opportunity to work with you. Please don’t hesitate to contact me today!