Home improvement loans can help bump up the value of your property in a more meaningful way than a simple coat of paint can provide. While many rely on credit cards, savings or gifts from friends and family to pay for a major renovation, others find that a loan is the only option that allows them to do what they need to do to make their home look and feel its best.
But what if the issue standing in the way of home improvement is your credit? Bad credit can limit your options when it comes to financing a major renovation, but it does not have to be a dealbreaker. Here are a few mitigating factors that could qualify you for a home improvement loan, even if you have poor or insufficient credit:
Higher interest rates
Poor credit may not automatically rule you out for qualifying for home improvement loans, but it may result in higher interest rates to help borrowers mitigate the risk. While not ideal, this may not be a bad thing if you are able to pay off your loans relatively quickly.
Tapping your equity
Have you already paid in a significant amount to your home? Tapping your home equity allows you to leverage what you already own into cash – which you can, in turn, funnel back into your home and raise its value.
Adding a co-signer with solid credit can often assuage the apprehension of a lender. When applying for a loan with a co-signer, the lender will typically either average out the credit scores of the applicants or – depending on the loan product – look at the highest score only.