It is natural to desire that your home be a haven of peace and comfort. After all, it is your fortress from the outside world. The kitchen should be considered as the heart of the home because this is where we get the energy we need to get on with our everyday lives. But remodeling the kitchen will require funds. What if you don’t have available cash and you have a bad credit standing? Home remodeling with bad credit is still possible, and you can still apply for a bad credit home loan despite your low credit score.
Increase your credit score
First of all, you have to make an impression. How do you save face or get a loan with a bad credit score under your belt? Try to increase your credit score to 700, which is considered as a good credit score. If you have a score below 700, wait for your credit core to shoot up before applying for a loan to have better chances of procuring the loan and getting an affordable interest rate. To help increase your credit score, maintain a job, avoid late payments and pay off your existing liabilities.
To get a good picture of why your credit score lowers when you have late payments or existing debts, try to look at it this way: Think of the bank like it is an insurance company. For example, you are looking at getting yourself life insurance and your are a professional race car driver. The insurance company will of course ask for a higher premium rate because your occupation is high-risk. This means you are more likely to die, therefore they are entitled to receive higher premiums because the chances of them paying your life insurance is bigger given the nature of your occupation. The same reasoning applies with credit scores. If you have late payments and existing debts, then when you try to procure a loan, you are high-risk because chances are, you will be late in paying the loan or you might file bankruptcy anytime because you have so many debts. This is the reason why you have to increase your credit score. A bigger credit score would translate to a lower risk of not being paid on the part of the bank. Not only do you have greater chances of procuring the loan, you also have the privilege of getting the loan at a lower interest rate, than getting one with a low credit score and a higher interest rate.
Apply to a bad credit company
Having a bad credit score is not the end of your loaning capabilities. There are companies that offer loans to people with bad credit. These messiahs can grant you a loan and make home remodeling with bad credit possible. The downside is, you will be subjected to a higher interest rate because you have bad credit. But still, you get the loan.
Another option is a co-signer. That is a lot to ask of another and it could strain your relationship, especially if you are unable to keep up your payments. Mom and dad may be willing to take the risk so if you feel comfortable asking them and they feel comfortable doing that enormous favor for you, that is a personal decision only you can decide.
Thinking small and advantages of using collateral
Thinking big is meant for other things which are motivational. In home remodeling with bad credit, your motivation is to keep the debt as low as possible so you have to think small.
Think of the cost of remodeling your kitchen. How much is it? Do not try to get more than what it costs. You might be thinking of getting a little extra on the side so you can buy other things. This could be a wrong move because you are already applying for a bad credit loan.
Scaling down the project until your situation improves is something to consider. Remodeling need not suck the breath out of you when it comes time to pay the bill. Be creative, instead of real granite counter tops there are products now available at the home improvement stores that look like granite and if you are handy you can install it yourself. Fresh paint is inexpensive and is another DIY fix. Remember that old saying about champagne on a beer budget. There is a reason why old adages are still in use today, the reason is they were and still are wise. You can splurge a little on champagne with the savings you will have achieved by being creative and still live within your beer budget.
You may be broke, but your solid assets can be useful when you are not liquid. Your solid assets, real and personal which you own like your car (personal) or your home (real) can be utilized as collateral when you want to apply for a loan with bad credit. They serve as security for the payment of the loan. If you cannot pay it off, and this is a huge downside, the loan you have executed over the things you put up as collateral will be foreclosed upon or repossessed.
It is also important not to feel complacent. It is human nature to overestimate the value of one’s own property, but leave the valuation to the bank. Do not over-loan, don’t get more than what you need. Keep it to the cost of the project. You will be amazed at how much money you could loan because of your collateral, but keep the amount of the loan to the cost of the project because you might end up being indebted more than before.