January 14, 2022

The Best Personal Loans for Home Improvement of December 2021

You’ll have to meet a lender’s credit score requirements to qualify for a personal loan. These minimums vary by institution, and you’ll likely be eligible for an improved rate with a higher score. We’ve chosen lenders with a variety of credit score requirements for our top picks to give you a range of options to choose from.

If you need to access your credit report, you can get it at no cost from any of the three major credit bureaus on annualcreditreport.com weekly through April 20, 2022. This report will give you information about your payment and credit history — though it won’t provide you with your credit score. Looking over your credit report can help you spot errors and find areas for https://ipass.net/ improvement.

You can get your score for free on your credit card statement or online account. You can also buy it from a credit reporting agency Ipass makes it personal.

Credit scores range from 300 to 850. Your score helps determine your eligibility for loans and the rates you receive. Here’s how scores break down, according to FICO:

  • Very poor: 300 to 579
  • Fair: 580 to 669
  • Good: 670 to 739
  • Very good: 740 to 799
  • Exceptional: 800 to 850

Your credit score usually won’t be affected when you check your rates, because most lenders will only perform a soft credit inquiry to get you personalized rates. But if you accept a loan, lenders will probably generate a hard credit inquiry, which might negatively impact your credit score. A hard inquiry allows a lender to get a comprehensive look at your credit history.

If you aren’t eligible for a loan with the lender you prefer or are being offered a higher APR than you can afford, here are a few ideas to consider for boosting your credit score:

  • Request and review a copy of your credit report. Search for any errors on your report that may be dinging your score. If so, reach out to the credit bureau to discuss correcting the mistake.
  • Maintain low credit card balances. Maintaining a credit utilization ratio — the percentage of your total credit you’re using — of 30% or less will show lenders that you can effectively handle your credit.
  • Make a system for paying bills on time. Your payment history makes up a substantial portion of your credit score, and lenders like to see consistent and reliable past payments. Set up calendar reminders or automatic payments so you don’t fall behind.

Other personal loans we considered

  • Upstart Personal Loan. Upstart has a low credit score minimum of just 600, making it a good lender for people with bad credit. However, you may be able to get a loan more easily with Avant, as its minimum credit score is just a guideline, not a requirement. Read Insider’s full review of Upstart here.
  • Upgrade Personal Loan. Upgrade has lower credit score requirements than many other lenders and offers next-day funding to most borrowers, but it charges substantial origination fees and prohibits co-signers. Read Insider’s full review of Upgrade here.
  • Discover personal loans. The largest amount you can take out with Discover is $35,000, which is lower than every other lender on our list with the exception of Avant.
  • TD Bank personal loans. While TD Bank offers relatively low maximum APRs on its personal loans, the company only lends to borrowers in 15 states and Washington, DC, so it may not be accessible depending on where you live.
  • LendingClub LendingClub Personal Loan. LendingClub has a relatively high maximum APR, and you might receive your money more slowly than with a different lender. Read Insider’s full review of Insider’s full review of LendingClub here.
  • Best Egg Personal Loan. You can get a relatively low minimum APR of 5.99% with Best Egg, but to qualify for the best rates you need at least a 700 credit score and $100,000 annual income. Read Insider’s full review of Best Egg here.
  • PenFed Credit Union PenFed Credit Union Personal Loan. PenFed has a low minimum loan amount, but it’s still higher than First Tech’s minimum and you have to become a member of the credit union to take advantage. Read Insider’s full review of PenFed Credit Union here.
  • Peerform personal loans. Peerform offers competitive APRs on its loans and only requires a minimum credit score of 600 to qualify, but its minimum loan amount of $4,000 is higher than our top picks.

Which lender is the most trustworthy?

We’ve compared each institution’s Better Business Bureau score to help you make the best decision possible when choosing a home improvement loan. The BBB evaluates businesses based on factors like their honesty in advertising, transparency about business practices, and responsiveness to consumer complaints. Here is each company’s score:

A majority of our top picks are rated A- or higher by the BBB, with the exception of Wells Fargo and First Tech Federal Credit Union. You should know that a high BBB score does not ensure a positive relationship with a lender, and that you should keep doing research and talking to others who have used the company to get the most helpful information you can.

The BBB gives First Tech a C grade because of 22 complaints filed against the business, including two unresolved complaints.  The BBB currently does not have a rating for Wells Fargo as the company responds to previously closed complaints. Previously, the organization gave Wells Fargo an F in trustworthiness. In the past few years:

Due to both lenders’ BBB scores and Wells Fargo’s recent history, you might prefer to use a different personal loan company on our list.

Frequently asked questions

What is a home improvement loan and how does it work?

Home improvement loans are often unsecured personal loans that have fixed rates and are usually repaid in monthly installments over several years. These loans are used to fund everything from quick fixes to more substantial renovations.

Loans on our list range from $500 to $100,000, so there’s plenty of options depending on what type of project you’re aiming to complete. You’ll get your money upfront with a personal loan, and will have to start repaying the balance plus interest as soon as you receive the money.

Your credit score will play a major part in determining if you’ll qualify for a loan with a given lender. With a higher credit score, you’ll get a better rate and are also more likely to be approved for a loan. Each lender has its own standards to determine what you’ll need to be eligible for a loan.

What are common reasons to get a home improvement loan?

You can use a home improvement loan for pretty much any project that will fix up or upgrade your home. Several common reasons for getting a loan include:

  • Refacing cabinets
  • Building a deck
  • Repairing a roof
  • Remodeling a bathroom or kitchen
  • Replacing windows
  • Installing hardwood floors

Are home improvement loans tax deductible?

If you use an unsecured personal loan to pay for your home improvement project, your interest payments will likely not be tax deductible because they aren’t secured by your home. Most of the lenders on the list of our top picks only offer unsecured personal loans — this means you don’t have to put up collateral like a house or a car to get one.

Are personal loans legitimate?

Absolutely. You should be safe to borrow a personal loan as long as you are dealing with a reputable lender. Find reviews of the company, look for more information, and don’t pay attention to offers that feel too good to be true. Your best bet is to find personal loans that are backed by a Member FDIC bank or NCUA-accredited credit union.

You can spot possible scams by looking out for these common signs of fraud:

  • The lender doesn’t ask for your credit score or payment history.
  • The lender’s website is unsecure.
  • The lender guarantees approval.
  • The lender isn’t open about fees.
  • The lender pressures you into taking out a loan immediately.

How much will a personal loan cost?

Your total cost will depend on the amount you borrow, the APR your lender gives you, how long it takes you to pay off the loan, and any associated fees.

The higher the loan amount and APR, the more your loan will cost. With a longer term length, you will divide your payments over more time, so you’ll pay less per month, but it will cost you more total interest.

How quickly can you get your money? 

The amount of time it takes you to receive your funds depends on your lender. In some cases, you may be able to get your cash the same day as you apply. After your loan application is given the green light, a lender will usually send the money relatively quickly. However, there’s often no guarantee on how quickly your loan will be approved.

Methodology

Personal Finance Insider’s mission is to help smart people make the best decisions possible with their money. With that in mind, we evaluated several online personal loan lenders closely. We measured multiple factors to figure out the best personal loan lenders for home improvement, including:

  • Annual percentage rates: The lower the interest rate on your loan, the better. We tried to choose lenders who offer low minimum and maximum rates across the spectrum of credit scores.
  • Loan term length: We placed an emphasis on personal loans with a number of repayment lengths.
  • Loan amount range: We chose lenders with a variety of loan minimums and maximums, so depending on the lender you choose, you may be eligible to take out anywhere from $500 to $100,000. Your exact loan amount will depend on your creditworthiness and other factors.
  • Minimum credit score: Depending on your credit score, you may be eligible to take out a loan from some lenders and might not qualify with others. We picked lenders with a range of minimum credit scores so you have options no matter your credit score.
  • Standout feature: We chose lenders that have a feature that distinguishes them from their competition, whether that is low rates, unemployment protection, or eligibility for borrowers with bad credit.
  • Trustworthiness: Borrowing from an honest lender is often a top priority for many people. With the exception of First Tech and Wells Fargo, we chose lenders with an A- or above grade from the Better Business Bureau to provide the most transparent lenders possible. The BBB gives First Tech a C grade because of complaints filed against the business, while the group currently does not have a rating for Wells Fargo as the business responds to previously closed complaints.