BEST OF

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.

Annie MillerberndOctober 19, 2020
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It may be more difficult to get a home improvement loan with a bad credit score (629 or lower FICO), but you still have options. In addition to online lenders, you can consider a loan from a credit union or a government-backed loan, which may have looser borrower requirements.

Some online lenders that offer personal loans for home improvement look beyond your credit score when they review your loan application, while others tailor their product specifically to bad-credit borrowers.

Bad-credit borrowers who qualify will likely get a higher interest rate than those with good or excellent credit, so it pays to carefully compare all your options.

Summary of Best Home Improvement Loans With Bad Credit

Our pick for

Co-signed Loans

Upgrade

on Upgrade's website

Upgrade

5.0

NerdWallet rating 
Upgrade

Min. Credit Score

580

Est. APR

6.94 - 35.97%

Loan Amount

$1,000 - $50,000

on Upgrade's website

Min. Credit Score

580

Key facts

Upgrade looks more closely at an applicant’s free cash flow than their credit score. You can also add a co-signer or co-borrower to a loan application to improve your chances of getting a low rate.

Pros

  • Allows secured, co-signed and joint loans.

  • Offers rate discount with direct payment to creditors on debt consolidation loans.

  • Rate discount for autopay.

Cons

  • Charges origination fee.

  • Charges late fee.

Qualifications

  • Minimum credit score: 580.

  • Minimum annual income: 35,000; average borrower income is $87,000.

  • Minimum credit history: 3 years.

  • Minimum number of accounts on credit history: 2.

  • Minimum monthly free cash flow: $800.

  • Maximum debt-to-income ratio: Varies between 55% and 65% including the loan you’re applying for and mortgage payments. To see your post-loan DTI, calculate your monthly payments on a personal loan, and then add them to your debt-to-income calculation.

  • Average loan amount is $10,000.

  • Average repayment term is 40 months.

Available Term Lengths

3 to 5 years

Fees

  • Origination fee: 2.9% to 8%.

Disclaimer

Personal loans made through Upgrade feature APRs of 6.94%-35.97%. All personal loans have a 2.9% to 8% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by Upgrade's lending partners. Information on Upgrade's lending partners can be found at https://www.upgrade.com/lending-partners/. Accept your loan offer and your funds will be sent to your bank or designated account within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes the transaction. From the time of approval, funds should be available within four (4) business days. Funds sent directly to pay off your creditors may take up to 2 weeks to clear, depending on the creditor.
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Our pick for

Low credit scores

Avant

on Avant's website

Avant

4.0

NerdWallet rating 
Avant

Min. Credit Score

550

Est. APR

9.95 - 35.99%

Loan Amount

$2,000 - $20,001

on Avant's website

Min. Credit Score

550

Key facts

Avant has a low credit score requirement compared to other online lenders. The company reports loan payments to all three major credit bureaus, so you can build credit through on-time payments.

Pros

  • Able to fund loans the next business day.

  • Option to change your payment date.

  • Soft credit check with pre-qualification.

  • Offers secured loan option.

Cons

  • Charge an origination fee.

  • Does not offer direct payment to creditors with debt consolidation loans.

  • No co-sign or joint loan option.

Qualifications

  • Minimum credit score of 550.

Available Term Lengths

2 to 5 years

Fees

  • Administrative fee: Up to 4.75%.

  • Late fee: $25 (most states).

  • Unsuccessful payment fee: $15 (most states).

Disclaimer

A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33. Minimum loan amounts may vary by state. If approved, the actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. An administration fee of up to 4.75% will be deducted from the loan proceeds. Avant branded credit products are issued by Webbank, member FDIC
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Our pick for

Secured loans

OneMain

on OneMain Financial's website

OneMain Financial

4.0

NerdWallet rating 
OneMain

Min. Credit Score

None

Est. APR

18.00 - 35.99%

Loan Amount

$1,500 - $20,000

on OneMain Financial's website

Min. Credit Score

None

Key facts

OneMain doesn’t consider a borrower’s credit score as closely as it considers the score it generates itself for applicants. The lender says it can fund a loan within a couple of business days.

Pros

  • Option to choose your payment date.

  • Offers joint and secured loans.

  • Able to fund a loan the same or next business day.

  • Offers online educational resources.

Cons

  • Rates are high compared to other online lenders.

  • Charges origination fee.

  • Does not offer direct payment to creditors on debt consolidation loans.

Qualifications

  • Minimum credit score: None.

  • Minimum income: Not disclosed; average is $45,000.

Available Term Lengths

2 to 5 years

Fees

  • Origination fee: $25 to $400 or 1 - 10%

Disclaimer

Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum annual percentage rate (APR) is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. Depending on the state where you open your loan, the origination fee may be either a flat amount or a percentage of your loan amount. Flat fee amounts vary by state, ranging from $25 to $300. Percentage-based fees vary by state ranging from 1% to 10% of your loan amount subject to certain state limits on the fee amount. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes. Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600. Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: North Carolina: $7,500. New York: $20,000. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.
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Our pick for

Limited credit history

Upstart

on Upstart's website

Upstart

4.5

NerdWallet rating 
Upstart

Min. Credit Score

580

Est. APR

8.94 - 35.99%

Loan Amount

$1,000 - $50,000

on Upstart's website

Min. Credit Score

580

Key facts

Upstart considers factors outside a borrower’s credit profile, like education, job history and residence. The lender says it can fund most loans the business day after an application is submitted.

Pros

  • Accepts borrowers new to credit.

  • Able to fund loans within one business day.

  • Offers direct payment to creditors with some debt consolidation loans.

Cons

  • Borrowers can choose from only two repayment term options.

  • Charges origination fee.

Qualifications

  • Minimum credit score: 580.

  • Minimum credit history: None, this lending platform accepts borrowers with credit history too limited to produce a FICO score.

  • Minimum gross income: $12,000.

  • Employment: Full-time job, full-time job offer starting in 6 months, a regular part-time job, or another source of regular income.

  • Must have U.S. residential street address where borrower resides (unless military personnel on active duty).

  • Must be at least 18 years old.

  • Valid email account required.

  • Personal bank account with U.S. routing number required.

Available Term Lengths

3 to 5 years

Fees

  • Origination fee: 0% - 8%.

  • Late fee: 5% of past due amount or $15, whichever is greater.

Disclaimer

● Your loan amount will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will qualify for the full amount. The minimum loan amount in MA is $7,000. The minimum loan amount in Ohio is $6,000. The minimum loan amount in NM is $5,100. The minimum loan amount in GA is $3,100. ● This offer is conditioned on final approval based on our consideration and verification of financial and non-financial information. Rate and loan amount are subject to change based upon information received in your full application. This offer may be accepted only by the person identified in this offer, who is old enough to legally enter into contract for the extension of credit, a US citizen or permanent resident, and a current resident of the U.S. Duplicate offers received are void. Closing your loan is contingent on your meeting our eligibility requirements, our verification of your information, and your agreement to the terms and conditions on the www.upstart.com website. ● The full range of available rates varies by state. The average 3-year loan offered across all lenders using the Upstart platform will have an APR of 25.79% and 36 monthly payments of $37 per $1,000 borrowed. There is no down payment and no prepayment penalty. Average APR is calculated based on 3-year rates offered in the last 1 month. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved.
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Our pick for

Improving credit through the loan

Lending Club

on LendingClub's website

LendingClub

4.0

NerdWallet rating 
Lending Club

Min. Credit Score

600

Est. APR

8.05 - 35.89%

Loan Amount

$1,000 - $40,000

on LendingClub's website

Min. Credit Score

600

Key facts

LendingClub accepts joint loan applications, which can help you qualify for a lower rate. The lender also offers a tool that helps borrowers manage their money and view their credit profile.

Pros

  • Offers co-signed and joint loan options.

  • Offers direct payment to creditors with debt consolidation loans.

  • Soft credit check with pre-qualification.

Cons

  • Borrowers can only choose from two repayment term options.

  • Rates are high compared to other online lenders.

  • Charges an origination fee.

Qualifications

  • Minimum credit score of 600. LendingClub uses FICO 8 credit scoring model.

  • Minimum credit history of three years.

  • Debt-to-income ratio of less than 40% for single applications, 35% combined for joint applicants.

Available Term Lengths

3 to 5 years

Fees

  • Origination fee: 1% to 6%

  • Late fee: Greater of $15 or 5% of payment after 15-day grace period.

Disclaimer

A representative example of loan payment terms is as follows: you receive a loan of $13,411 for a term of 36 months, with an interest rate of 12.16% and a 5.30% origination fee of $711, for an APR of 15.99%. In this example, you will receive $12,700 and will make 36 monthly payments of $446.46. Loan amounts range from $1,000 to $40,000 and loan term lengths are 36 months or 60 months. Some amounts and term lengths may be unavailable in certain states. APR ranges from 8.05% to 35.89% and is determined at the time of application. Origination fee ranges from 3% to 6% of the loan amount. Lowest APR is available to borrowers with excellent credit. Advertised rates are subject to change without notice. Loans are made by LendingClub Bank, N.A., Member FDIC (“LendingClub Bank”), a wholly-owned subsidiary of LendingClub Corporation, NMLS ID 167439. Loans are subject to credit approval and sufficient investor commitment before they can be funded or issued. Certain information that we subsequently obtain as part of the application process (including but not limited to information in your consumer report, your income, the loan amount that your request, the purpose of your loan, and qualifying debt) will be considered and could affect your ability to obtain a loan from us. Loan closing is contingent on accepting all required agreements and disclosures at Lendingclub.com. “LendingClub” is a trademark of LendingClub Bank.
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Should you get a home improvement loan with bad credit?

A personal loan for home improvements could be a good option if you don’t want to tap home equity or max out your credit cards on the project.

Just be prepared for high interest rates if you have bad credit. Lenders look at credit scores as a primary factor in deciding whether you qualify and what rate you get. Bad-credit borrowers who qualify typically pay the highest annual percentage rates lenders offer, which can be 30% or higher.

Beyond rates, consider other features of home improvement loans to help you decide if they’re the right way to finance your project.

  • Fast funding. Lenders can often fund a loan in less than a week, and some say they can get you the funds the day you apply.

  • Fixed payments. Unlike a credit card or line of credit, the funds from a personal loan are distributed in a lump sum, so you won’t be tempted to spend beyond your project’s budget, and you make fixed monthly payments.

  • Short terms. Compared with home equity loans, personal loans have short repayment terms — typically two to seven years — which also means they have higher monthly payments.

  • Unsecured. Most personal loans are unsecured, meaning they don't require you to pledge collateral. Home equity financing, on the other hand, is secured by your home.

» MORE: Personal loans for bad credit

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 help your application stand out.

Build your credit to qualify

If your home improvement project isn’t urgent, it may be better to take time to build your credit so you can qualify for a lower rate and a higher loan amount. Here are some tips to build credit before you get a home improvement loan.

  • Check your credit report for errors. You can get a free copy of your credit report from annualcreditreport.com and see what a lender will see when reviewing your file. Address errors or outstanding delinquencies before you apply.

  • Stay on top of payments. Your payment history is the biggest factor influencing your credit score. On-time bill payments can help you build credit. Set up autopay or payment reminders for all your accounts.

  • Pay down 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.

  • Stay under your credit limit. Avoid heavy spending on your credit cards before submitting a home improvement loan application. Using less of your available credit lowers your credit utilization rate, which can positively impact your credit.

Add a co-signer or collateral to your application

Adding a co-signer or co-borrower with good or excellent credit can help you qualify or get a lower rate. Keep in mind that a co-signer would be on the hook for any payments you can’t make.

Some banks and credit unions offer secured loans, which require you to pledge something you own as collateral, typically a car or savings account. The lender can take your property if you don't repay the loan.

Home improvement loan alternatives for bad-credit borrowers

Home improvement loans from credit unions

Credit unions, which are not-for-profit financial institutions, typically have lower qualification requirements and rates for borrowers with bad credit. You must first become a member of a credit union, which typically involves a small fee and an initial deposit.

» MORE: Learn about credit union loans

First Tech offers a personal loan and line of credit that can be used to finance home improvements. Its personal loans carry loan terms of up to seven years.

PenFed’s personal loans can have repayment terms as long as five years. The lender lets applicants add a co-signer, which can help you qualify for a lower rate.

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. FHA lenders typically require a minimum credit score of 500 to qualify for any FHA-insured loan.

Rates vary by lender but are often lower than personal loans for funding home improvement projects.

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 cash, it may be worth asking a friend or relative to lend you the money. These loans don’t require good credit and they allow you and your friend or relative to decide on repayment terms and any interest.

With this type of loan, your relationship with the lender is collateral, and if you’re not careful, it could cause conflict. Learn the do’s and don’ts before diving in with a family loan.

Last updated on October 19, 2020

Methodology

NerdWallet's ratings for personal loans award points to lenders that offer consumer-friendly features, including soft credit checks, no fees, transparency of loan rates and terms, flexible payment options, accessible customer service, reporting of payments to credit bureaus and financial education. We also consider the number of complaints filed with agencies like the Consumer Financial Protection Bureau. This methodology applies only to lenders that cap interest rates at 36%, the maximum rate financial experts and consumer advocates agree is the acceptable limit for a loan to be affordable. NerdWallet does not receive compensation of any sort for our reviews.

To recap our selections...

NerdWallet's Best Home Improvement Loans With Bad Credit

Frequently asked questions