Home Improvement Loans With Bad Credit

Regardless of what prompts your home improvement project, it can be a costly affair.

Funding such projects can be challenging, and this is where home improvement loans come in. They can help you get the financing you need to cover the costs of your desired home improvements.

Qualifying for any type of loan with less than average credit can be difficult, including home improvement loans. However, it’s not impossible.

With the right advice and guidance, you can find various lenders who can offer you home improvement loans with bad credit.

Read on to learn about home improvement loans with bad credit and how you can access them in the UK without breaking a sweat!

What Are Home Improvement Loans With Bad Credit?

Home improvement loans with bad credit are loans designed for borrowers with a less than perfect credit history or those with little to no credit history. Having bad credit simply means you have lower scores in your credit report because of various issues. These can include not repaying a previous loan in full, bankruptcy, or defaulting on a loan.

It can even be that you made a late payment on a loan in the past, and although lenders shouldn’t hold this against you, they often do. It can also be that you simply don’t have any credit history to speak of because;

You’re a young adult who hasn’t built a credit record.
You recently relocated to the UK since you can’t transfer credit histories from overseas.
You’ve never opened a bank account or borrowed credit.

Thankfully, many lenders understand that we all have financial hiccups at one point or another. Instead of solely focusing on your past financial hurdles, they’ll consider your income and how you handle your finances now to offer a home improvement loan with bad credit.

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How Do Home Improvement Loans With Bad Credit Work?

Home improvement loans with bad credit usually have higher interest rates and more stringent terms than other loans. This is because of the risk that comes with bad credit borrowers. Lenders will offer higher rates to mitigate the risk of you not paying them back.

It’s crucial that you first work out what you can realistically and comfortably repay each month. You can then compare home improvement loans with bad credit from different lenders to find one suitable to your financial needs and ability.

Lenders may cap the maximum amount they can offer to borrowers with bad credit. Ensure you only apply for loans that you’re likely to get to avoid too many credit searches that may impact your credit score. Most lenders allow you to check your eligibility even before you apply.

Keep in mind that each lender will use their criteria when assessing your application, and some may view you more positively than others. Working with a loans adviser can help you get lenders who are most likely to give you a home improvement loan with bad credit.

How To Get Higher Limits and Better Rates

You can do various things to get better rates, higher limits, or qualify for home improvement loans with bad credit. These include:

Having A Guarantor

Having a guarantor can open many borrowing doors for you if you’ve struggled to get home improvement loans with bad credit. It involves having the financial backing of a friend or family member who agrees to meet the loan repayments when you’re unable to pay.

Incorporating a guarantor is suitable for borrowers who find it hard to access funding independently due to bad credit history, low income, or other reasons. The loan is effectively ‘guaranteed’ when someone backs you up, allowing the lender to consider advancing a home improvement loan with bad credit at higher limits and better rates.

Remember, the better the guarantor’s credit rating and financial position, the better the rates and higher the limits lenders will offer you.

Having Security

You can secure a home improvement loan with bad credit by presenting some form of collateral to the lender. This involves linking the loan to an asset like your home, car, bonds, stock, jewellery, equipment, or other valuables.

Lenders can take possession of the asset tied to the loan if you fail to repay.

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As such, it’s straightforward to get approved for loans if you have security because it reduces the risk for the lender. You’ll also be able to borrow more money for your home improvement project with better rates and repayment terms than you’d otherwise get. The lender knows you’ll be motivated to repay to avoid losing your asset.

Choose A No Credit Check Loan Option

In this type of loan, the lender doesn’t perform a credit check or consider your credit history when deciding whether to approve you for a home improvement loan. Such loans are perfect for individuals with non-existent or bad credit histories.

The lender will only conduct an affordability assessment and verify your income to determine whether you can repay or not instead of focusing on your credit score. It can be a lifesaver if an urgent home improvement like a leaking roof is required and you don’t have a great credit score or don’t want lenders prying into your credit history. With such loans, you’ll usually get a fixed repayment period and interest rate.

Related quick help guides:

Improve Your Credit Score

Checking your credit score is the first step to improving it. You may have a bad credit score due to an error, and checking it at least once a year can ensure any discrepancies are corrected. Paying back any outstanding debts can also help improve your credit score.

Remember, you have the power to influence your credit score through your financial behaviour, and improving it boosts your chances of getting the home improvement loan you want.

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Managing Home Improvement Loans With Bad Credit

A home improvement loan with bad credit will help with your project and benefit your credit score provided you pay back diligently. Making repayments on time will reflect positively on your credit score, show you’re a reliable borrower, and help you qualify for better deals in the future.