How To Get a Home Improvement Loan With Bad Credit

Getting a home mortgage loan with a questionable credit is one thing. Getting a home improvement loan with bad credit is an entirely different challenge altogether. Luckily, it’s not impossible. The good news is that just like getting qualified for a home mortgage loan, getting a home improvement loan is not out of your reach.

If your home is in need of improvement—much like your credit—there are ways of securing the financing you need to get the job done. It may require a little work on your end, however. Here’s what our team at Blue Water recommends.

Want to discuss your options with one of our loan officers? Don’t hesitate to contact us here.

The U.S. Department of Housing and Urban Development (HUD) offers a variety of programs to assist homeowners with securing loans for home rehabilitation projects. An example is the FHA’s Streamlined 203(k) program—a loan program that permits homeowners the opportunity to finance up to $35,000 into their mortgage to repair, improve or upgrade their home.

There’s also the FHA Title 1 loan—which helps those who would otherwise not be approved for a home improvement loan to get the money they need to repair their residential property.

Be prepared for prequalification! Download our checklist for helpful tips.

There are many private lenders who specialize in helping homeowners with bad credit get a home improvement loan. In some cases, homeowners with bad credit who are seeking a home improvement loan may be a good fit for lenders because the lender is ensured that the money will be put to good use.

Another option for homeowners with questionable credit is coming up with a co-signer—which is another party that signs onto the debt in order to help you achieve a lower interest rate. Many people use family members or close friends to co-sign.

Download our free eBook here on how to get a mortgage after a bankruptcy

This option involves informal lending practices such as getting the money you need from peers, or something called micro-lending—which is when small lenders help a borrower with incremental loans. It’s also not a bad idea to scope out the local credit union to see if they can help you get a loan despite your poor credit history.

Chances are one of the above recommendations will help you secure the loan you need to make improvements to your home. But be aware that some lenders or loan programs feature higher interest rates for homeowners with poor credit—so do your research before agreeing to anything.

One of the best steps you can take to get a home improvement loan when you have bad credit is to start working on repairing your credit in the first place. If you follow the steps provided below, your credit score should begin to repair itself gradually over time.

1. Look at your credit score – Don’t just look at your credit score; really try to understand what it represents. Remember, you’re entitled to a free copy of your credit report every 12 months, so there’s no reason why you can’t begin getting to know your score better
2. Identify areas of improvement – Since your credit report contains everything you need to know about your credit history, be sure to go through it with a fine-tooth comb to identify any mistakes or areas in need of improvement.
3. Start repairing your credit – This step involves making the tough decisions, such as paying off your debt, settling any unpaid or overdue debt and not taking out any more credit until your score is back up to where it needs to be. The sooner you start to repair your credit, the closer you are to improving your credit score and the closer you are to getting that home improvement loan without any additional assistance.At Blue Water Mortgage, we’re always looking out for first time homebuyers or homeowners with a questionable credit history. Our team of experienced mortgage professionals has helped numerous clients secure the loan they need—despite having a few red marks on their credit report.

Blue Water Mortgage is licensed in New Hampshire, Maine, Massachusetts, Connecticut, Vermont, Rhode Island, Florida, North Carolina, Colorado, Texas, Georgia, and South Carolina.

We have also helped plenty of homeowners who continued to improve their credit after securing their loan refinance for more advantageous terms. Contact us today to find out how we can help you.