Can You Qualify for Unsecured (Home improvement al) Home Improvement Loans?
February 1st, 2009
Secured home improvement loans protect the lender by guaranteeing payment of the money owed with the very same property that will be improved. If you have sufficient equity on your home there is nothing easier than getting approved for such a loan regardless of your credit situation.
Unsecured home improvement loans, on the other side have more requirements because they lack that guarantee. The lenders instead of focusing on the property’s value will focus on your personal credit and financial situation in order to decide whether to approve you for a loan or not. Thus, Unsecured Home Improvement Loans can be considered to be personal unsecured loans.
Requirements
The main requirement for loan approval is your credit score. Even though a bad credit score won’t determine a loan decline right away, it will actually affect the approval conditions and the terms of the loan. For starters, if you have bad credit, you won’t be able to request high loan amounts or long repayment programs. The higher risk implied in loan transactions with bad credit applicants scares lenders away. Thus, only limited amounts and small repayment schedules can be obtained with bad credit.
Due to the nature of these loans, only the near-past credit history is significant (unless of course there is a bankruptcy on your credit report). A clean near-past credit history shouldn’t have any missed payments, late payments or other delinquencies. A Three or four months of uninterrupted timely payments of bills and loan installments is necessary for approval in most cases.
The Loan
Unsecured Home Improvement Loans can be used for undertaking any home improvement you can think of. Those which raise the property’s value are judged with special consideration by lenders if the property belongs to the applicant. However, as stated above, unsecured home improvement loans focus on the person of the applicant and not on the property itself.
The interest rate charged for Unsecured Home Improvement Loans is slightly higher than that of secured home improvement loans (which are home equity loans) but considerably lower than the interest rate charged for pay day loans or credit cards. The interest rate charged is similar to other unsecured personal loans. Of course, this applies only to home improvement loans granted to people with good or very good credit.
Those applicants with a bad credit score may have to face a higher interest rate due to the higher risk involved in the transaction. In any case, it will always be lower than cash advance or pay day loans and credit cards.
As regards to loan amount and loan length, the loan terms are variable and can be tailored to your needs. However, this flexibility will also depend on your credit and on your income. If you can afford high payments you can request shorter repayment programs and higher loan amounts. Otherwise you’ll have to cope with longer loans and smaller amounts.
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Mary Wise, a professional consultant with twenty years in the financial field, helps people in the process of securing personal loans, mortgage, refinance or consolidation loans and preventing consumers from falling into the hands of fraudulent lenders. In her website, badcreditloanservices.com you will find more useful tips and interesting articles on this and many other financial topics. Tip! Be polite and extend the same courtesy to your contractor that you would extend to anyone else. Your home improvement contractor is not your servant (not that you should disrespect your servant either)! The point is that your behavior can affect the way that your contractor behaves toward you.
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