No Credit Check Home Improvement Loans

Can you get a home improvement loan without a credit check?

Yes, there are a few different ways that you could get a home improvement loan without a credit check. However, the question you may want to ask yourself is are the risks and costs associated with no credit check loans worth it, or should I spend some time improving my credit score to qualify for a normal home improvement loan?

No credit check loans can come with a number of risks and added costs. A no credit check loan is a loan type where the lender does not conduct a borrower credit check before approving and extending out loans. They tend to be for smaller amounts with a shorter payback period.

In exchange for allowing a borrower to take out a loan without checking their credit score, these types of loans tend to come with the highest interest rates, may have many additional fees, and can sometimes cause someone to fall into a debt spiral. A debt spiral is when a borrower is unable to pay their no credit check loan on time, and instead of defaulting, they are allowed to take out a new loan to pay for the old loan and keep whatever money is left over to be paid by the end of the next payback period. This can happen many times over, and in the process, the interest and fees that are accumulated are insanely high, sometimes causing the borrower to fall into an even more dire financial situation than before they received their first no credit check loan. Here are a few examples of no credit check loans.

Payday loans: Payday loans are short-term loans that typically come in smaller amounts that need to be paid back in as little as 2 or 4-weeks. You are essentially getting a short-term secured personal loan that uses your next paycheck as collateral. Payday loans are not ideal for funding a home improvement project, however, if you have an emergency home repair like a broken window, busted hot water heater, or you need to hire a plumber to unclog some drains, then a Payday loan could be an option to get some quick cash when you have no other options. The main downfall of payday loans is that they often can come with APRs that are sometimes 350% or even 400% or more. Additionally, if you are unable to pay back your loan by the end of the payback period, you could be at risk of entering a debt spiral by taking out a new loan to cover the old loan plus your daily expenses for the next few weeks. The amount of interest and fees that get accumulated in this type of debt cycle are astronomical. Also, you may end up doing some severe damage to an already fragile credit score.

Auto title loans: Auto title loans are another form of no credit check loans. Essentially, you are using your credit score as collateral to secure a short-term personal loan, typically around 30-days. The amount of the loan entirely depends on the value of your car. You can still use your vehicle during the time you are paying back the loan, however, the title loan center will most likely have your title in hand. If you are unable to pay the loan at the end of the payback period, you can either obtain a new larger loan to cover the old loan plus interest and fees, or the lender has the right to seize your vehicle and sell it in order to recoup the loan balance. If you take on a new loan to pay off the old loan, this is potentially the beginning of another form of the debt spiral. Although there are many risks to an auto title loan, if you have bad credit but you know for sure that you have a large sum of money coming in a few weeks from a job that you are completing or from your tax returns, an auto title loan could be a way to get some fast money to start purchasing materials, putting a down payment on a contractor, and getting your home improvement project or home repairs started right away. Just make sure you fully understand the risks involved, especially if you are dependent on your vehicle to get you to your place of employment each day.

No credit check installment loans: No credit check installment loans are an upfront lump-sum payment that you receive and then pay back over a predetermined number of monthly installments. You may be able to obtain a larger sum of money with a no credit check installment loan, however, typically these types of loans can come with interest rates as high as 36%, and if you submit a late payment or you miss a payment, the fees can be quite significant. That being said, if you can afford the monthly payments, a no credit check installment loan may be your best option for a home improvement project or home repair when compared to the previous two no credit check loan types.

Conventional and more cost-effective types of home improvement loans include personal home improvement loans, home equity loans, home equity lines of credit, and personal lines of credit. By paying off some current debts, taking care of any delinquent accounts, and by making sure you make every debt payment on time and in full, you may be able to boost your credit score in a period of 3 to 6-months to a level that can help you qualify for a conventional home improvement loan.

Another option you may have if you do not have time to work on your credit score and you are trying to avoid using a no credit check loan type is to find a co-signer or co-borrower with good or excellent credit who can help you qualify for a home improvement loan. If your spouse has great credit, then having them listed as a co-borrower may be the best move. If you need a cosigner, you could speak with your spouse, partner, parents, siblings, or close personal friends. Just understand that co-signed loans bring their own number of risks to both the primary borrower and the co-signer that can be damaging not only financially, but interpersonally as well. Even strong relationships can be damaged when it comes to matters of money.

What credit score do you need for a home improvement loan?

When it comes to home improvement loans, minimum credit score requirements are mostly determined by the lender and the loan type. For example, for a personal home improvement loan, most lenders are going to want to see a minimum credit score of 600 and a debt-to-income ratio that is below 43%, or sometimes 36%, including the potential monthly payments from the new loan. However, some lenders may require a credit score that is well above 660, 680, or even 700 to be considered for a personal home improvement loan. And then, some lenders may be willing to work with a borrower with a credit score as low as 560. It all really depends on the lender, but a good benchmark is to have a credit score of at least 600 before considering applying for a personal home improvement loan. If you are unsure if you may or may not qualify for a personal home improvement loan, one of the best things you can do is go online and prequalify. When you prequalify, you can then see which lenders may be willing to work with you based on your specific credit profile.

For a home improvement loan that comes from a home equity loan, home equity line of credit, or a cash-out refinance, most mortgage lenders are going to want to see a minimum credit score of 620. If you have a credit score below 620, you could always consider a renovation loan through the FHA. FHA 203k rehabilitation loans have refinance options as well. Minimum credit scores for an FHA loan start at 500 with a 10% down payment, and 580 with a down payment of 3.5%.

Should I raise my credit score before applying for a home improvement loan?

Yes, if you have a home improvement project in mind that is not an emergency repair like replacing a broken furnace or fixing a busted water pipe, then you can afford to wait a few months to boost your credit score. The benefit of doing so could potentially save you hundreds or even thousands of dollars over time. Any time you are considering opening a new line of credit, it is almost always a good idea to try to raise your credit score before applying. The higher your credit score is, the more likely it is that you may be able to qualify for the loan. Also, you may be able to access much lower interest rates and your loan may not come with any additional fees.

The process of raising your credit score may take some hard work and some sacrifice, however, in the end, any effort exerted may be rewarded many times over. You may want to consider getting a part-time job, starting a side-gig, or selling some personal property during this time to increase your cash flow. This may allow you to apply the additional income directly to paying off debts and taking care of any delinquent accounts. These two actions may have the largest and quickest effect on your credit score. Also during this time, make sure you continue to pay all of your bills on time and that you do not open any new lines of credit. After a period of 3 to 6-months, you may notice some positive changes in your credit score.

What are other requirements for home improvement loans?

For personal home improvement loans, lenders are going to want to see that your debt-to-income ratio is at a sustainable level that will not get in the way of you being able to make your monthly loan payments on time and in full. For some lenders this may be a DTI that is below 43%, for others, it may be 36%.

For home-secured loans like home equity loans, HELOCs, or cash-out refinances, they are also going to want to see a debt-to-income ratio below 43%, however, in order to be considered in the first place, you should have at least 20% equity built up into your home. Some mortgage lenders may consider a home-secured loan for someone with only 15% equity, however, 20% tends to be the magic number that can help your chances of being approved.

Can you get a home improvement loan with bankruptcy?

If you are currently going through bankruptcy or have recently closed your bankruptcy it may be nearly impossible to qualify for a home improvement loan. However, if bankruptcy is in your past and enough time has elapsed, you may qualify for a home improvement loan.Lenders may be hesitant to loan you money or they may request that you secure the loan with collateral. Whatever their special requests are, you should find a way to accommodate them so that you can overcome the bankruptcy mark on your credit report. Getting new credit and paying it off in a timely manner can help you reestablish financial stability which can help you qualify for loans down the road.

If you are looking for a home-secured loan like a home equity loan, HELOC, or a cash-out refinance, you may still be able to qualify after bankruptcy depending on the lender and the specifics of your financial situation including how much equity you have and the value of your home.

What is the best way to get money for home improvements?

If you have a good amount of equity in your home, at least 20%, then a home-secured loan like a home equity loan, HELOC, or a cash-out refinance may be one of the best ways to get money for home improvements. The reason is that these types of loans often come with lower interest rates, they can be for larger amounts of money, and they have longer payback periods that can span up to 30-years.

Do I need to tell the mortgage company about renovations?

Often, mortgage companies may have a review clause built into the mortgage agreement that may require you to notify your lender of any renovations you are planning on completing. This could be renovations like finishing a basement, building a deck, constructing an addition, or putting on a second level. However, some minor things like repainting the walls or putting in new carpeting may not have to be reviewed by your mortgage lender. Most often, mortgage lenders are going to approve the renovations, especially if they can add value to your home, however, to be safe, you should always notify your lender of any anticipated renovations or remodeling projects before breaking ground.

What are the best alternatives to home improvement loans?

There are many alternatives to a home improvement loan that you could consider, however, two of the best options include paying cash or opening a personal line of credit.

If you have a home improvement project in mind, the best way to pay for it is with cash. You can hire a designer or an architect to create some plans that you can then present to a contractor for a bid. Once you receive a bid, you can start putting money away each pay period to go directly to paying for your home improvement project. Be careful because some bids are only valid for a particular period of time, however, you can safely guess that even if you do need to have a second bid done once you have saved up the money, the bid should be somewhere in the ballpark of the first bid.

A personal line of credit is extremely useful for home improvement projects whether you are hiring professionals or doing the work yourself. Once approved for a specific spending limit, you can access those funds through a special debit card, by writing a check, or by taking cash out from a branch or ATM. You can take as little or as much of the funds as you would like, and you can pay it back each month allowing you to free up space on your credit limit as you go. This type of financing is perfect for paying as you go home improvement projects where you can pay contractors, plumbers, electricians, and purchase materials as you need over the course of the project.

How do you choose the best home improvement loan?

Choosing the best home improvement loan is not a difficult process, however, you may want to make sure that you cover all your bases to ensure that you are getting the best deal possible on a home improvement loan considering your credit and financial situation. You should compare interest rates, available loan terms, monthly payments, if there are any additional fees like late fees or early pay-off penalties, and if the loan comes with any special programs or perks. For programs and perks, you can look for things like rate discounts when you sign up for autopay, unemployment protection, and loan deferment options. Also, you may want to spend some time reading customer reviews to see if there are any consistent complaints about a particular lender or if there are any red flags that emerge.

The best way to review all these different factors before accepting a loan offer and deciding to work with a particular lender is to prequalify. Once you prequalify, you can review the rates, terms, fees, and special programs of multiple lenders side-by-side and at the same time. This can help immensely when you are trying to identify the key differences between lenders and the loans that they offer.

How do you apply for a home improvement loan?

Before officially applying for a loan, you should check offers to determine who you want to work with. Most lenders offer a pre qualification process that allows you to receive an offer without a hard credit pull. Online platforms such as Acorn Finance simplify the process of checking offers. Simply, submit one form and receive multiple home improvement loan offers with no impact on your credit score. Here are some valuable steps to follow to find the best home improvement loans. . .
Check your credit score
Check home improvement loan offers
Choose the offer that is best
Complete the approval process with the lender of your choice
Submit any requested documentation
Receive funds