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Home Improvement Loans With Bad Credit: Compare Options

Steve NicastroMarch 26, 2020

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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.

Having a bad personal credit score (from 300 to 629 on the FICO scale) presents obstacles to getting any type of credit, including a home improvement loan. But it doesn’t mean you don't have any options.

You may still qualify for a personal loan, either from an online lender or credit union, or a government-insured home loan. With bad credit, interest rates may be high, so it pays to carefully compare each choice.

If your home improvement project isn't urgent, your best bet may be to build your credit. Doing so opens up more options like lower-cost personal loans and home equity loans.

Summary of Home Improvement Loans With Bad Credit: Compare Options

LenderNerdWallet Rating Est. APRMin. Credit ScoreLearn More
Upgrade

Upgrade

on Upgrade's website

Best for Home improvement loans with bad credit

7.99 - 35.97%

600

on Upgrade's website

Avant

Avant

on Avant's website

Best for Home improvement loans with bad credit

9.95 - 35.99%

580

on Avant's website

OneMain

OneMain Financial

on OneMain Financial's website

Best for Home improvement loans with bad credit

18.00 - 35.99%

None

on OneMain Financial's website

Upstart

Upstart

on Upstart's website

Best for Home improvement loans with bad credit

4.99 - 35.99%

600

on Upstart's website

Lending Club

LendingClub

See my rates

on NerdWallet's secure website

Best for Home improvement loans with bad credit

10.68 - 35.89%

600

See my rates

on NerdWallet's secure website

Our picks for

Home improvement loans with bad credit

Upgrade

on Upgrade's website

Upgrade

Upgrade

Min. Credit Score

600

Est. APR

7.99 - 35.97%

Loan Amount

$1,000 - $35,000

on Upgrade's website


Min. Credit Score

600

Key facts

Upgrade offers personal loans plus credit-building tools; you'll need strong cash flow to qualify.

Pros

  • Credit health tools.

  • Hardship plans.

  • Directly pays creditors for debt consolidation loans used to pay off credit cards.

Cons

  • Origination and late fees.

Qualifications

  • Minimum credit score: 600.

  • Minimum annual income: None, but most applicants earn more than $30,000.

  • Minimum monthly free cash flow: $800.

  • Maximum debt-to-income ratio: 60%.

  • Unavailable to borrowers in: Iowa, Washington D.C. or West Virginia.

Available Term Lengths

3 to 5 years

Fees

  • Origination fee: 2.9% to 8%

Disclaimer

Personal loans made through Upgrade feature APRs of 7.99%-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/.
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Avant

on Avant's website

Avant

Min. Credit Score

580

Est. APR

9.95 - 35.99%

Loan Amount

$2,000 - $35,000

on Avant's website


Min. Credit Score

580

Key facts

Avant's low starting rates make it a good option for borrowers with low credit scores and income.

Pros

  • Able to fund loans within one business day.

  • Soft credit check with pre-qualification.

  • Option to change your payment date.

Cons

  • Charges origination fee.

  • No option to include co-signer.

Qualifications

  • Minimum credit score of 580.

  • At least $20,000 in gross annual income.

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
Read Full Review
OneMain

on OneMain Financial's website

OneMain Financial

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 is an option for bad-credit borrowers, but it comes with high starting rates and an origination fee.

Pros

  • May fund a loan the same day.

  • Offers joint and secured loan options.

  • Free credit score access.

Cons

  • Charges origination fee.

  • Rates are high compared to other lenders that serve similar borrowers.

Qualifications

  • Minimum credit score: None, average is 626

  • Minimum credit history: Not provided.

  • Minimum annual income: None, average is $49,000.

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 $400. 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: Florida: $8,000. Iowa: $8,500. Maine: $7,000. Mississippi: $7,500. North Carolina: $7,500. New York: $20,000. Texas: $8,000. West Virginia: $14,000. 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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Upstart

on Upstart's website

Upstart

Upstart

Min. Credit Score

600

Est. APR

4.99 - 35.99%

Loan Amount

$1,000 - $50,000

on Upstart's website


Min. Credit Score

600

Key facts

Upstart is a good option for those who have short credit histories and promising financial futures.

Pros

  • Accepts borrowers new to credit.

  • Fast funding.

Cons

  • Origination and late fees.

  • No secured or co-sign option.

Qualifications

  • Minimum credit score: 620.

  • Minimum credit history: None.

  • Minimum annual income: $12,000.

  • Max debt-to-income ratio: 45%.

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

This offer is conditioned upon final approval from an Upstart Powered bank or licensed lender which is based on consideration and verification of financial and non-financial information. Rate and loan amount are subject to change based upon information provided 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 a contract for the extension of credit and who currently resides in the United States. Duplicate offers received are void. Closing your loan is contingent upon meeting certain eligibility requirements and your agreement to the terms and conditions of Upstart and a bank or a licensed lender partnered with Upstart. Loans are originated by Upstart Powered banks and licensed lenders on the Upstart platform. Loans in Maryland, Massachusetts, Nevada, and Nebraska are made by Cross River Bank, an FDIC-insured New Jersey state chartered commercial bank. 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. 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 23% and 36 monthly payments of $36 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 loan amount will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved
Read Full Review
Lending Club
See my rates

on NerdWallet's secure website

LendingClub

Lending Club

Min. Credit Score

600

Est. APR

10.68 - 35.89%

Loan Amount

$1,000 - $40,000

See my rates

on NerdWallet's secure website


Min. Credit Score

600

Key facts

LendingClub is a pioneer of peer-to-peer lending and a good option if you want to consolidate your debt.

Pros

  • Offers direct payment to creditors with debt consolidation loans.

  • Joint loan option.

  • Soft credit check with pre-qualification.

Cons

  • Charges origination fee and late fees.

  • Does not offer mobile app to manage your loan.

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: 2% to 6%

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

Disclaimer

*All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage and history. The APR ranges from 10.68% to 35.89%. The origination fee ranges from 1% to 6% of the original principal balance and is deducted from your loan proceeds. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at the time of application. The average origination fee is 5.49% as of Q1 2017. In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,025 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months. Borrower must be a U.S. citizen, permanent resident or be in the United States on a valid long-term visa and at least 18 years old. Valid bank account and Social Security number are required. Equal Housing Lender. All loans are subject to credit approval. LendingClub’s physical address is: 595 Market St suite 200 San Francisco Ca 94105. **Based on approximately 60% of borrowers who received offers through LendingClub’s marketing partners between Jan. 1, 2018, and July 20, 2018. The time it will take to fund your loan may vary.
Read Full Review

Personal loans for home improvements

Unsecured personal loans

Unsecured personal loans can be used to fund home improvements, and the process of getting a personal loan is typically fast; some lenders fund personal loans within a day, and they don’t require home inspections.

On the other hand, rates on unsecured personal loans can be high for borrowers with bad credit, and because qualifying depends a lot on your credit score, your options are limited to lenders that accept low credit scores.

Secured personal loans

If you don’t qualify for an unsecured personal loan, a secured loan may be an option if you have savings or other collateral to pledge against the loan. Rates on secured personal loans are usually lower than unsecured loans, and you might qualify for a larger loan.

Pledging an asset may increase your chances of approval, but the lender can take the asset if you don’t repay the loan.

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. First Tech Federal Credit Union and Navy Federal are two options.

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.

Navy Federal, a credit union that primarily serves members of the military, offers home improvement loans with extended loan terms of up to 15 years.

Government-insured loans for home improvements

Home improvement loans insured by the Federal Housing Administration are similar to conventional mortgages but have more lenient 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: This loan helps homeowners finance non-luxury home improvements. The improvements must 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. Title I loans don't require a property inspection.

Build your credit for more home loan options

Bumping up your credit to good or excellent (690 to 850 FICO) can mean lower rates and more options, including unsecured personal loans, home equity loans, HELOCs and 0% introductory APR credit cards.

Here are tips to build your credit before submitting a loan application:

  • Get a free copy of your credit report. Your credit report may contain errors that are hurting your score, like payments applied to the wrong account. You can get your reports for free once every 12 months using AnnualCreditReport.com. Then, dispute any errors to get them removed.

  • Stay on top of payments. Your payment history is the biggest factor influencing your credit score. If you pay your bills on time, your score should improve. Set up autopay or payment reminders for all your accounts.

  • Stay under your credit limit. Don’t take on new debt before submitting a home improvement loan application. Using less of your available credit has a positive impact on your credit utilization rate, which has an impact on your credit score.

Last updated on March 26, 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 Home Improvement Loans With Bad Credit: Compare Options

  • Upgrade: Best for Home improvement loans with bad credit
  • Avant: Best for Home improvement loans with bad credit
  • OneMain Financial : Best for Home improvement loans with bad credit
  • Upstart: Best for Home improvement loans with bad credit
  • LendingClub: Best for Home improvement loans with bad credit

Frequently asked questions