Furnishing Your Home With Bad Credit

Updated: November 25, 2023 Author:

Key takeaways:

  • Bad credit doesn’t mean you have no options to finance furniture
  • Bad credit loans, guarantor loans, and rent-to-own models are the best options
  • Secured loans, credit cards, and buy-now, pay-later loans are alternatives
  • Guarantors need a stable income and a good credit history to be considered
  • Rebuilding your credit score is the best way to secure future financing
  • Loans for people with bad credit can help to improve your credit rating

    Financing furniture with bad credit isn’t as straightforward as getting an everyday loan. If you’ve had problems meeting repayments in the past, chances are that creditors might decline your applications. But if you’re moving to a new home, you’re inevitably going to need somewhere to sit, sleep, and eat. So, is furnishing your home with bad credit an option, and how can you finance furniture if you have a less-than-perfect credit history?

    Firstly, understand that an adverse credit history isn’t the end of the world. Fortunately, you have a number of options available to finance furniture with bad credit, depending on your circumstances. Below, we’ll take a look at the avenues available to you.

    What Options Do You Have for Furnishing Your Home With Bad Credit?

    Contrary to popular belief, having a shaky credit history doesn’t always disqualify you from all kinds of finance. While larger banks and mainstream lenders might turn you away, alternative loan providers and in-store credit could still be available to you.

    Ready to find financing for your new home? Here are some of the potential options you have for furnishing your home with a bad credit history.

    Loans for people with bad credit

    That’s right, having bad credit doesn’t mean that you’re automatically disqualified from any kind of loan. Some companies operate on a lending model that specifically caters for people like you who have had trouble keeping up with repayments in the past. They understand that life circumstances can lead to financial difficulty that isn’t intentional.

    Comparing loans for bad credit can help you to find financing for your furniture so that you’re able to support yourself as you get on your feet in your new home. The rates won’t be the most favourable in the industry, but it does mean you’re not completely out of options for making your new home comfortable.

    Guarantor loans

    Guarantor loans are one of your most likely avenues of success when trying to secure financing for your furniture. That’s because in most cases, guarantor loan companies will overlook your credit history in favour of another person with a better repayment streak – your guarantor.

    Guarantor loans bridge the gap in trust between companies that lend money and the people who need to borrow it. Essentially, a trusted person, such as a friend or family member, agrees to “guarantee” the loan – that is, to promise that it will be repaid, even if they have to step in and make a payment themselves.

    Usually, your guarantor needs to be in a strong financial position themselves. Many guarantor loan companies will therefore ask you to provide somebody who is a homeowner – they’re seen as much more financially responsible than somebody who’s renting a property, and in some cases, they have an asset that can be used as a means of securing the loan in the event of non-payment.

    Here’s a rundown of the criteria that is usually used to assess a guarantor:

    1. A strong credit rating: Your guarantor is there to guarantee that the loan will be paid back, so they’re the one who needs a good credit score. People with poor credit histories are unlikely to be accepted as your guarantor.
    2. A stable income: Your guarantor should also have a reliable, stable source of income. Unemployed people will likely be rejected, though some companies will consider savings or retirement incomes.
    3. Low income-to-debt ratio: If your prospective guarantor looks like they’re already repaying a large number of debts and their income is stretched, they might be rejected.

    Rent-to-own furniture

    Some companies offer furniture on a rent-to-own basis, where you can furnish your home upfront and repay the cost of the furniture over a fixed period. One of the most well-known brands operating a rent-to-own model is one you’ve probably heard of – BrightHouse, which went into administration in 2020.

    While this kind of financing is usually easier to secure – and indeed available to people with poorer credit histories – there’s a catch. Usually, the cost of the items is much higher than it would ordinarily be, and there are often fees attached.

    You’re far more likely to have success and pay less in the long run, if you compare loans for people with bad credit ratings. While the interest rate (APR) will be higher than you’d get from a bank or other mainstream lender, you’re more likely to be approved when you apply with companies that are tailored towards your unique financial situation.

    Other options for furniture financing with bad credit:

    The above three options are your most likely routes for securing furniture financing, but there are other options available, too. Your success with these may depend on the extent of the missed repayments or other negative factors impacting your credit score:

    • Buy now, pay later (BNPL) agreements: A fixed-term, monthly payment plan.
    • Credit cards: Credit card companies like Capital One often accept people applying for credit cards for bad credit.
    • Secured loans: Typically secured against your home, if you’re a homeowner.

    Rebuild Your Credit Score to Secure Financing for Furniture

    The easiest way to ensure that you can get the finance you need in future is to work on building your credit score. Even if you’ve missed repayments in the past, or have defaulted on debts, it doesn’t mean that you’re locked out of consumer finance options forever.

    Better still, securing a loan for people with bad credit can help build up your credit score more quickly. As long as you’re meeting the repayments, bad credit loans will help to repair any damage that’s been done to your credit history in the past.