Having an exquisite and comfortable house is everyone’s dream. And to make their dreams come true, they need to refurbish their home. Unfortunately, making a home-improvement project can burn a hole in your pocket. Therefore, you need to get a home improvement loan. Then, you just realized that you are a person with bad credit and begin wondering whether the bank will lend you some money. No need to worry! Here are some ways to take out home improvement loans with bad credit.
Getting loans from Peer-to-Peer lending
Peer-to-peer (P2P) lending is a debt financing method that enables you to borrow some money without any help from financial institution. Those who use P2P, which is also called as social lending, are usually failed to meet the requirements made by banks such as the people who want to get home improvement loans with bad credit.
Online P2P lending service is a convenient way to get your home improvement loan. Some P2P lenders will give you the loan if your credit score is, at least, 600. You only need to visit one of online P2P websites such as LendingClub, Prosper, and Peerform and fill in the application form.
After completing the application form, the websites will take your level of risk and credit score into their consideration. If you are considered as a good investment, the websites will offer for funding within a few minutes.
Despite the less challenging requirements, applying for P2P lending does not mean that you will not get any risk. The interest rates are also prone to be higher than the banks. It means you are likely to pay a higher monthly payment.
Getting loans from friends or family
This is the easiest way to get home improvement loans with bad credit. If your home renovation project will set you back $1,500 or less, you do not need to apply for home improvement loans in a bank or P2P lending and go through such an arduous requirement. You can borrow some money from your friends or family.
Borrowing some money from friends and family is quite simple. But you still need to write down some agreements that can protect both the borrower and the lender. The agreement includes the interest rates, the repayment terms, and what will happen if you cannot pay off the loan.
Getting loans from the government
There are various kinds of financing programs offered by The US Department of Housing and Urban Development that help you have securing loans for home improvement project. One of them is FHA Title 1 loan. It will help you finance your home improvement in spite of the bad credit.
Those are some alternative ways to get home improvement loans with bad credit. You can choose one of them which meet your needs well. But you also need to fix your credit score so that you will be able to get the loans from banks which usually allow you to pay lower monthly payment as they provide lower interest rates.