Financing a flooring project without a credit check is challenging because the primary options are for emergency needs only. You do not want to worsen a bad situation for home improvements that can wait.
Payday cash advances do not involve credit checks but require repayment in weeks rather than months and impose hefty origination fees that snowball if you renew the loan too often.
Vehicle title loans do not involve a credit check either. Still, you must pledge your car as collateral and risk losing your transportation to repossession if you fall behind on payments.
Fortunately, homeowners with weak borrowing credentials often qualify for other programs that allow them to pay monthly – provided they follow specific pathways.
Pay Monthly Flooring
Suppose you want to finance a flooring project and pay monthly without a credit check. In that case, you must identify an alternative to emergency cash advances (payday and vehicle title), which are inappropriate for home improvement projects.
This section explores three different avenues that might help homeowners with bad credit histories upgrade their living surfaces.
Sub-Prime Lenders
Homeowners with adverse histories on their consumer reports often think that finding nearby finance companies that do not perform a credit check is the only way to pay monthly for their flooring project. This assumption is not valid.
- Your neighborhood flooring company probably does not offer in-house financing. They will likely refer prospective customers to a third party that might not approve your application.
- Subprime companies specialize in lending to consumers with bad credit. They might consider alternative data (rental history, cell phone payments, etc.) instead of or in addition to FICO and Vantage scores.
- Online lead aggregators capture unsecured personal loan requests from interested consumers and present their borrowing credentials to a vast network of subprime lenders. Sheer volume boosts your approval odds.
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Income-Based
Homeowners with adverse histories on their consumer reports also assume they can pay monthly for their flooring with no credit check while ignoring the project’s total cost. This belief is also invalid.
Personal loan companies base approval on income relative to the cost of your project and the other monthly obligations you must satisfy already. All lenders consider a second crucial underwriting metric: the Debt-to-Income ratio (DTI).
DTI = Monthly debt obligations / Monthly household income
Keeping the DTI below 50% is the critical success factor when your borrowing credentials are less than ideal. Since most homeowners already have a mortgage, we have a good starting point to illustrate an acceptable budget for your flooring project.
For example, a hypothetical married couple with an annual household income of $120,000 ($10,000 monthly) might manage a reasonable DTI as follows.
| Obligation | Monthly Payment | Cumulative DTI |
|---|---|---|
| Mortgage | $3,500 | 35% |
| Car Loans & Leases | $1,000 | 45% |
| Credit Cards | $250 | 47.5% |
| Flooring | $250 | 50% |
If our example couple can afford an additional $250 monthly payment, we can solve the project price of about $5,000 using possible parameters from subprime lenders.
- Interest rate: 19%
- Origination fee: 5%
- Loan term: 24 months
Then, taking the pricing for various products, we see that our hypothetical couple could afford to finance a $5,000 flooring project for two 500-square-foot rooms (20 X 25) – when choosing an option priced at $5 per square foot.
Flooring Cost Ranges per Square Foot [1]
| Type | Low | High |
|---|---|---|
| Hardwood | $6 | $22 |
| Laminate | $3 | $10 |
| Carpeting | $1 | $12 |
| Tile (Stone & Ceramic) | $6 | $20 |
| Vinyl or Linoleum | $3 | $7 |
Medically Necessary
Believe it or not, a Flexible Spending Account (FSA) could be a viable way to finance vinyl or linoleum flooring without a credit check. However, only people with specific health conditions will qualify.
This FSA trick can fund specific home repairs addressing health and safety issues.
Home improvements accompanied by a letter of medical necessity are FSA eligible, provided they do not increase the property value. Vinyl or linoleum are the proper choices, given their lower price points.
For instance, a person who uses a wheelchair might need to remove plush, padded carpeting and install rigid flooring to facilitate movement.
Workers can use the entire sum in their FSA at the beginning of the year, regardless of whether they have made contributions beforehand. They can reimburse the advanced amount throughout the year by taking pre-tax deductions from their salary.
- Elect to make FSA contributions during the annual open enrollment.
- Install the vinyl flooring at the beginning of the FSA plan year.
- Your employer must reimburse qualifying expenses immediately.
- You can repay the interest-free advance using pretax dollars in up to 12 months, which can save you money in three ways.
- Federal income taxes
- State income taxes (where applicable)
- FICA taxes
Per IRS rules, employers cannot pull your consumer report or consider your FICO or Vantage score. They must accept all participants regardless of any adverse payment information appearing on their file.
Carpet Financing Options
Financing carpet without a credit check is also inadvisable because dirty or worn-out rugs do not represent emergencies. Again, payday cash advances and title loans will be too expensive.
However, buy-now-pay-later apps and deposit requirements allow us to reinforce crucial financing concepts that apply to any flooring project.
No Deposit
Buying carpets (or any other type of flooring) on finance with no deposit is an unrealistic expectation – especially when you have an adverse payment history on your consumer report that you want the lender to ignore.
Homeowners with immaculate borrowing qualifications might be able to avoid making a sizable deposit. However, those with weaker credentials might have to make a down payment for several reasons.
- Deposits lower the amount financed, leading to lower monthly payments, which are more likely to meet lender DTI underwriting limits (see above).
- Down payments signal that you have the financial capacity to follow through on your promise to make the monthly payments on time and according to terms.
- Deposits cover the retailer costs of ordering the carpet from the manufacturer, loading the truck, and sending an installation crew to your home.
Buy-Now-Pay-Later
You might be able to utilize buy-now-pay-later apps to finance carpeting without a credit check. However, as with any other type of flooring, the project price and retailer business relationships are crucial factors in this financing alternative.
Small Amounts
Many buy-now-pay-later companies will approve small amounts without a credit check, so the question becomes whether your carpeting project budget fits under the boundary.
For instance, Klarna runs a soft inquiry before approving a Pay in 4 transactions, where you spread payments out over six weeks: one at checkout and three more every two weeks. [2]
However, Klarna employs account spending limits on Pay in 4 transactions, and a $5,000 carpeting project might exceed the maximum. Plus, you are spreading payments over weeks rather than months, making it harder to afford.
Retailer Relationships
Your local carpeting store must offer a buy-now-pay-later option. Otherwise, the no-credit check option provides no value. These financing companies charge hefty interchange fees (a percentage of the purchase price), so many retailers do not offer the alternative or limit its scope.
For example, Home Depot accepts the Klarna app for general merchandise but not for installation services. Therefore, you could finance the carpeting but need to find another way to fund the costs of putting it in your home: measuring, preparing the subfloor, nailing tack strips, cutting, stretching, anchoring, etc.
Area Rugs
Finally, buy-now-pay-later is a viable financing option for area rugs without a credit check because they satisfy all the criteria covered in this article. What a great way to summarize the topic!
Area rugs are much cheaper than wall-to-wall carpeting. Therefore, the amount financed is much smaller, and the payments are much easier to afford, even when split weekly rather than monthly.
Also, area rugs fall into the merchandise category and do not require a team of workers to drive to your house for installation. Therefore, you can use the Klarna app at Home Depot to make this purchase.
Article Citations:
[1] Home Advisor Flooring Costs
