How Can I Get a Construction Loan with Bad Credit?

Getting a construction loan with a bad credit score is possible but can be difficult to obtain. The lender would need an assurance that you will pay back the loan, hence they would be looking for a good credit score, that is above 750. If you have a good credit score there is a low possibility that you would default in the loan payments. But there are ways to get a construction loan with a bad credit score:

Get secured construction loans:

You can get a secured loan even though you have a bad credit score. By pledging collateral you will be able to get a loan easily as the lender will have your collateral as security. Getting a big amount of loan with a bad credit score is near impossible if you don’t have security. 

Make large down payments:

If you are not willing to pledge a collateral, you can make a large down payment. Down paying 30% of the requested loan amount will prove to the lenders that you are very serious about the construction. This way the lender will have an assurance that you are creditworthy and will know you are a responsible borrower. Hence, sanctioning of  the loan will become much easier.

Improve your credit score:  

Have time before you start your construction? In that case, you can improve your credit score by resolving your negative issues. It might take time but once you have cleared all your issues, your credit score will increase. Thus by having a good credit score you can easily get a construction loan at low interest rates.