Home improvement is a popular pastime, but when you start installing real wood flooring and new kitchens, it can get a bit expensive. Ideally you would save up for the projects you want to carry out, but realistically, with new kitchens and bathrooms costing many thousands of dollars, this is rarely an option.

Borrowing cash is an accepted way to fund home improvements. Personal loans and credit cards can also be used to finance such projects, and as long as you choose the right home improvements, you can expect to recoup the expenditure fairly quickly. But what happens if you have a poor credit history – what are your options?

Ask Family and Friends

For smaller loans, it might be worth asking family and friends if they can help you out. If they agree, make sure you draw up a formal loan agreement that stipulates what the loan repayment terms are, so everyone knows where they stand. Be aware that if you fail to pay the loan back, it will damage the relationship you have with the person who lent you the money.

Home Improvement Personal Loans

Lenders take your credit history into account when they decide whether (or not) to let you borrow money. People with good credit ratings are offered loans with competitive rates of interest and favourable terms, but people with bad credit histories are either offered loans with higher interest rates, or turned down flat. However, different lenders have different ways of calculating a credit score, so although one lender might say “no”, another could quite easily say “yes”.

Bad Credit Loans

If you need to borrow money to pay for home improvements, check the market for lenders specialising inpoor credit loan products. Unlike high street lenders who prefer not to touch customers with bad credit, specialist lenders are more flexible and will consider customers who have been turned down elsewhere.

You will be expected to pay a higher rate of interest if you qualify for a loan, but as long as you manage your finances responsibly and make the repayments on time, this will show the lender you have learned from your previous mistakes – and make it easier to qualify for loan products from less expensive lenders.

Peer to Peer Lenders

Credit unions and peer to peer lenders have different lending criteria and are often a good choice for people who don’t have access to regular lenders because of their poor credit history. On the downside, you will have to pay a higher rate of interest in return.

Pay Day Loans

People with bad credit ratings are often tempted to turn to payday loan companies when they need cash to pay for things such as home improvements, but although it might seem like a good idea, the repayment terms are usually heavily weighted in favour of the lender. Don’t borrow from a payday loan company if at all possible, because interest rates will be very high.

Never borrow money unless you can afford the repayments, no matter how badly you want to improve your home.