Less than perfect credit can sometimes get in the way between you and your desires. Getting a personal loan to make home improvements can be really difficult for people with bad credit and almost impossible to those who have gone through a bankruptcy. However there are Bad Credit Home Improvement Loans available and qualifying is not that hard.
The bad credit obstacle can be avoided if you manage to get approved for a Bad Credit Home Improvement Loan. In order to do so, there are some things you need to take into account before applying. You already know your credit report will not look good when it is checked but yet, there are measures you can take to make it look better and to improve your chances.
Preparing For Loan Approval
Bad Credit Home Improvement Loans are equity loans and thus secured. Since the lender has enough guarantee that he will recover his money one way or another they will not focus that much on your past credit history. However, there are two things that need to be taken care of.
Your recent credit history (and by recent we mean at least the last three months) has to be impeccable. You need to make sure there are no late payments and no missed payments within the last three months. Also, if you can manage to arrange your budget so as to reduce your debt as much as possible, this will also increase your odds.
Your income is also a very important issue. You need to make sure you can show proof of a steady income suitable for repaying the loan installments. If you have too many expenses you might want to reduce them and start putting the money into a savings account for any unexpected event. This will show the lender that you are capable of repaying the loan.
On a side note, if you have gone through a bankruptcy, you needn't worry because you can still get approved. However, the bankruptcy has to be discharged and at least six months have to have passed since the discharge or your application will be immediately disqualified. Also, your credit report has to show a perfect credit behavior since that moment on.
As stated above, bad credit home improvement loans are secured loans. The interest rate charged is therefore not that high. But due to the applicant being a high risk client, the lender will not be that flexible when it comes to loan amount and loan length.
The amount of money you will be able to request will not reach up to the whole amount of your remaining equity. You will be able to obtain up to 80% or 85% of your home equity. Only those with a perfect credit score and history can get 100% financing or those 115% special offers.
The loan length will also be limited and will depend on the loan amount and on your income. Home Improvement Equity Loans can be repaid in up to 30 years but bad credit home improvement loans are usually offered for 15 years or less. However, if your credit situation improves, you can always refinance your loan and get better rates and longer repayment programs.