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Best Home Improvement Loans With Bad Credit

You have choices for a home improvement loan if you have a bad credit score. Online lenders, credit unions and FHA lenders may provide options.

By
Annie Millerbernd
Apr 24, 2023

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Best Home Improvement Loans With Bad Credit From Our Partners

Lender
NerdWallet Rating
Est. APR
Loan amount
Min. credit score
Learn more
Upgrade

Upgrade

Top 3 most visited 🏆
Get rateon Upgrade's website
on Upgrade's website
Best for Bad-credit home improvement loans with credit-building tools

8.49-35.99%

$1,000-$50,000

560

Upstart

Upstart

4.5
/5
Best for Bad-credit home improvement loans for thin credit history

4.60-35.99%

$1,000-$50,000

None

Universal Credit

Universal Credit

Get rateon Universal Credit's website
on Universal Credit's website
4.0
/5
Best for Bad-credit home improvement loans for low credit scores

11.69-35.99%

$1,000-$50,000

560

Get rateon Universal Credit's website
on Universal Credit's website
Avant

Avant

4.0
/5
Best for Bad-credit home improvement loans with fast funding

9.95-35.99%

$2,000-$35,000

550

OneMain

OneMain Financial

Get rateon OneMain Financial's website
on OneMain Financial's website
3.5
/5
Best for Secured bad-credit home improvement loans

18.00-35.99%

$1,500-$20,000

None

Get rateon OneMain Financial's website
on OneMain Financial's website

Our pick for

Bad-credit home improvement loans with credit-building tools

Upgrade
Get rateon Upgrade's website
on Upgrade's website
Upgrade

Upgrade

Est. APR

8.49-35.99%

Loan amount

$1,000-$50,000

Min. credit score

560

Our pick for

Secured bad-credit home improvement loans

OneMain
Get rateon OneMain Financial's website
on OneMain Financial's website
OneMain

OneMain Financial

3.5
Est. APR

18.00-35.99%

Loan amount

$1,500-$20,000

Min. credit score

None

Our pick for

Bad-credit home improvement loans for thin credit history

Upstart
Get rateon Upstart's website
on Upstart's website
Upstart

Upstart

Est. APR

4.60-35.99%

Loan amount

$1,000-$50,000

Min. credit score

None

Our pick for

Bad-credit home improvement loans for low credit scores

Universal Credit
Get rateon Universal Credit's website
on Universal Credit's website
Universal Credit

Universal Credit

Est. APR

11.69-35.99%

Loan amount

$1,000-$50,000

Min. credit score

560

Our pick for

Bad-credit home improvement loans with fast funding

Avant
Get rateon Avant's website
on Avant's website
Avant

Avant

Est. APR

9.95-35.99%

Loan amount

$2,000-$35,000

Min. credit score

550

Bad credit home improvement loans vs. home equity financing

If you have equity in your home, borrowing against it could be an affordable way to finance the renovation. While you typically need a credit score of at least 620, lenders may have softer qualification criteria on home equity loans and lines of credit because the home is collateral for the loan, meaning they can take it if you fail to repay. Typically, the interest on home equity financing is tax-deductible if you use the funds to pay for home improvements. This isn’t true for personal loans.

Home equity loans and lines of credit

Home equity loans let you lock in a fixed interest rate for a lump sum of cash. HELOCs are open credit lines with variable rates that you draw from as you need for about 10 years. Repayment terms for both can be 15 to 20 years.

Compare to personal loans: Home equity loans and credit lines often have lower rates and longer repayment terms than personal loans. Home equity lenders may also require a home appraisal before approval, meaning you could wait a few weeks or longer to get the funds. Personal loans are typically approved and funded within a week.

Cash-out refinance

A cash-out refinance lets you exchange your current mortgage for a larger one and “cash out” the difference between what you currently owe and the new loan. You use the leftover funds for the renovation. It's typically a good option if rates are lower than what you’re paying.

Compare to personal loans: A cash-out refinance for home improvement projects should have two benefits: You can finance a remodel and lower your mortgage rate. A personal loan will only give you the first benefit. A cash-out refinance may be better for larger projects because closing costs can be 2% to 6% of the loan amount, which might exceed the cost of smaller updates. There are no closing costs with personal loans.

How to compare home improvement loans with bad credit

A home improvement loan could be a good choice if you don’t want to tap equity or max out your credit cards on the project. Just be prepared for high interest rates if you have bad credit.

Here are some features to compare among bad credit home improvement loans.

APR

The annual percentage rate reflects the full cost of a loan, including any fees the lender charges. APRs are from 6% to 36%, but borrowers with low credit scores can expect a rate on the high end of a lender’s range. Use APR to compare the cost of personal loans and other financing options.

Monthly payments

A home improvement loan calculator lets you preview a loan’s monthly payment at different rates and repayment terms. This can help you determine what loan offer you need to stay within your budget.

Repayment terms

Bad credit home improvement loans often have repayment terms of one to seven years, but some lenders have more limited options. A longer-term loan will have lower monthly payments but higher overall interest costs, so look for a term that strikes a balance.

Fast funding

Many lenders can fund a loan in less than a week, and some say they can get you the funds the day you apply. If you’re paying for an urgent repair or an in-progress project, look for a lender that offers fast funding.

How to qualify for a bad credit home improvement loan

Your credit score is a major factor in deciding whether you get a personal loan, but there are a few things you can do to improve your chances.

  • Stay on top of payments. Your payment history is the biggest factor influencing your credit score. On-time bill payments look good on a loan application and help you build credit.

  • Pay existing debts to lower your debt-to-income ratio. Most lenders want to see that you have enough cash each month to cover existing expenses, plus the extra loan payment.

  • Add a co-signer or co-borrower. Adding someone with better credit and a high income to vouch for you on the application can boost your chances of qualifying or get you a lower rate. However, your co-applicant must repay the loan if you fail to.

  • Get a secured loan. With a secured loan, you attach collateral to the application, like a car or savings account, in exchange for a lower rate. The lender can take the collateral if you don’t make the payments.

  • Pre-qualify. Many lenders let you pre-qualify online to preview your potential rate and loan amount. The process doesn’t require a hard credit pull, so your score won’t be affected, and it can set expectations for the loan you may get.

Home improvement loan alternatives for bad-credit borrowers

Government-insured loans for home improvements

Home improvement loans insured by the Federal Housing Administration are similar to conventional mortgages but have looser qualification requirements. You usually need a minimum credit score of 500 to qualify for any FHA-insured loan.

Rates vary by lender but are often lower than personal loans.

FHA 203(k) renovation loan: With a 203(k) loan, you refinance your existing mortgage and roll home improvement costs into the new mortgage. In addition to meeting a lender’s credit requirements, borrowers must have no foreclosures within the past three years.

The 203(k) loan process can be time-consuming. You must work with a mortgage lender to pre-qualify, a general contractor to create a scope of repairs and a HUD consultant to complete an inspection.

FHA Title I loan: The requirement to get this type of loan is pretty broad. According to the HUD website, this loan can be used for home improvements that “substantially protect or improve the basic livability or utility of the property.”

Title I loans under $7,500 are unsecured, while larger loans must be secured by a mortgage or deed of trust on the property, according to HUD.

Family loans

If you don’t qualify for another type of loan but urgently need a small amount of cash, it may be worth asking a friend or relative to lend you the money. Family loans don’t require good credit and they allow you and your friend or relative to decide on interest and repayment terms.

With this type of loan, your relationship with the lender is collateral, and if you’re not careful, it could cause conflict.

Last updated on April 24, 2023

Methodology

NerdWallet’s review process evaluates and rates personal loan products from more than 35 financial institutions. We collect over 45 data points from each lender, interview company representatives and compare the lender with others that seek the same customer or offer a similar personal loan product. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.

Our star ratings award points to lenders that offer consumer-friendly features, including: soft credit checks to pre-qualify, competitive interest rates and no fees, transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to credit bureaus and financial education. We also consider regulatory actions filed by agencies like the Consumer Financial Protection Bureau. We weigh these factors based on our assessment of which are the most important to consumers and how meaningfully they impact consumers’ experiences.

This methodology applies only to lenders that cap interest rates at 36%, the maximum rate most financial experts and consumer advocates agree is the acceptable limit for a loan to be affordable. NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodologies for personal loans and our editorial guidelines.

To recap our selections...

NerdWallet's Best Home Improvement Loans With Bad Credit

  • Upgrade: Best for Bad-credit home improvement loans with credit-building tools
  • OneMain Financial : Best for Secured bad-credit home improvement loans
  • Upstart: Best for Bad-credit home improvement loans for thin credit history
  • Universal Credit: Best for Bad-credit home improvement loans for low credit scores
  • Avant: Best for Bad-credit home improvement loans with fast funding

Frequently asked questions

  • Some lenders say they’ll accept a credit score as low as 560, but higher is better. Even lenders that tailor their loans to bad-credit borrowers may seek a credit score of 600 or higher. Find out what credit score you need to get a personal loan.

  • If you have bad credit, you may still qualify for a home improvement loan. You can improve your chances of getting a good rate by cleaning up your credit report, adding a co-signer and pre-qualifying with multiple lenders. Learn more about how to get a loan with bad credit.

  • Home improvement loans may be a good idea when used toward renovations that improve the value of your home or repairs that improve livability and safety. The monthly loan payments should fit comfortably into your budget.

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