Yes – You Can Get Home Improvement Loans with Bad Credit

Alex Parsons Alex Parsons | Secured Loan Expert

Your home is probably the biggest single investment you will ever make in your life. You know that, which is why you are intent on doing a few home improvements that will increase the value of the property and make your home more comfortable for you and your family. But what if you have bad credit? Can you still get the money you need for home improvements? Absolutely. You can get home improvement loans with bad credit by using the equity in your property as collateral.

This kind of loan is known as a secured loan in the banking business. The 'secured' designation comes from the fact that the bank secures the money you borrow through a second charge on your home. Should you fail to repay what you owe, your bank could repossess your home and sell it. Whoever possesses the first charge would be paid first; your secured loan lender would be paid second.

You may be familiar with all of this if you are a regular reader of our blog. Now you are wondering whether a secured loan is the best way to go if you have credit issues. Only you can make that decision, but we might suggest stepping back and asking yourself a few questions. The answers to these questions should help you navigate your way through the secured loan quandary.

1. Why do I have bad credit to begin with?

Sometimes bad credit is a direct result of poor spending choices in the past. A person might run up a tremendous amount of credit card debt and then be unable to pay it back. Other times, however, bad credit is simply the result of losing a job or having health problems. If you know that you are not a reckless spender, and you are positive that you have the financial resources to pay off a secured loan, borrowing for home improvements may be a good idea.

2. Is my budget currently stretched to the limit?

Understand that home improvement loans with bad credit will subject you to higher interest than you would have paid had your credit been better. That means your monthly payments will be higher as well. You need to compare projected monthly payments against your current budget. Is your budget stretched already? If so, you could be in trouble down the road if interest rates should rise.

3. Are the home improvements I'm thinking of really necessary?

When home improvements are required for structural or mechanical reasons, borrowing money to complete them is a decision that is much easier to make. But if improvements are merely cosmetic, perhaps now is not the time to do them. You might be better off working to repair your credit so that you can get a secured loan in the future with better rates and terms.

4. Will home improvements really increase the value of my property?

Any estate agent will tell you that not every home improvement is a good home improvement in terms of resale value. There are certain kinds of home improvements buyers are looking for; there are other types of home improvements they care nothing about. Any decision to use the equity in your property to improve the value of your home needs to focus on those improvements that are desirable to buyers.

Yes, home improvement loans with bad credit are possible. Whether or not such a loan is right in your case depends on your circumstances. Do plenty of research, compare loan offers, and ask lots of questions of lenders.

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