If you are struggling with no credit or bad credit, no credit check loans can be the choice you make. They don’t take into account your traditional credit history.
If you don’t have any credit score or your credit score is low, a traditional financial institution will be reluctant to give you a loan. Traditional financial institutions or banks seek a 670 or above FICO credit score. You must consider a loan where traditional credit check will not be an issue.
However, no credit check loans operate on strict loan terms and have a higher interest rate. You must only accept a loan offer after completely understanding its terms.
What Are No Credit Check Loans?
If you’re in urgent need of cash to resolve an emergency expense like a medical procedure or a car repair, regardless of your credit score you can avail no credit check loans. Lenders don’t go through the hassle of performing a thorough investigation of your credit report for a no credit check loan. However, you may still fail to qualify for a no credit check loan.
Experian, TransUnion, or Equifax generate a FICO score, no credit check loans don’t ask for a traditional credit score. Lenders will instead gather personal information to ensure that you’re financially capable of paying the loan back. These include proof of other sources of income, paystubs, records of borrowing history (like student loan or auto loan), bank statements, and so on.
What Are The Options For No Credit Check Loans?
You’ll find a list of loans where your traditional credit score isn’t required. This includes a list of options like fast cash from payday lenders, online loans, and other options like borrowing from your loved ones.
- Credit Unions Loans
You can avail a secured or an unsecured loan if you are associated with a credit union. Members with a good standing can easily get a loan from some credit unions. There are credit unions that will consider a member’s financial information beyond their credit score. The factors for approving a loan will vary from one credit union to another.
- Credit Union Payday Alternative Loans (PALs)
If you’re in need of short -term cash, federal credit unions offer PALs or payday alternative loans to its members. Borrowers are required to pay off the loan amount in monthly installments rather than a single pay period. The interest rate cap is 28%. Although PALs check your credit score, they specialize in approving loans to those with poor credit scores. The key factors that determine whether or not a loan will be sanctioned are based on an individual’s income and their ability to pay back.
- Payday Loans
A short-term unsecured loan or payday loans don’t need a credit check. Borrowers can face APRs or Annual Percentage Rates of 400% or more with payday loans. They are an extremely expensive option. An annual percentage rate is the total sum of the loan that includes fees, interest rates, and the required time to pay back the loan. You will have to pay higher APRs in case you have a bad credit score.
Borrowers are required to pay back the loan in a couple of weeks, usually as early as their next paycheck.
- Car Title Loans
Car Title Loans are a kind of secured loan where you use your vehicle as collateral. In case you fail to pay back the loan, your vehicle will be repossessed by the lender. Your loan amount will be the same as the value of your vehicle. These loans often charge up to 25% of the borrowed amount. Borrowers are required to pay back the loan amount within a month.
- Online Bad Credit Loans
If you’re in need of a loan and have poor credit score or no credit score, you can take a personal installment loan from some online lenders.
Borrowers need to make monthly payments of the loan. Some lenders run a credit check before approving a bad credit loan while others use your financial information to ascertain financing. You must compare different lenders and their terms before applying for a bad credit loan.
- Loans From Friends and Family –
Your credit score won’t matter to your loved ones when you need to borrow money or take a loan.
- Co-signed Loans –
You can find a co-signer when you’re trying to obtain a bad credit loan. This person will apply for the loan along with you and be held responsible in case you fail to pay the loan amount. Lenders feel more confident in approving a bad credit loan if you have a co-signer.
Know Your Credit Score
Find out your credit score before applying for a loan or a no credit check loan. This will enable you to understand the types of financing that is available for you.
FICO Credit Score Ranges
Exceptional Credit – 800 or higher
Very Good Credit – 740 – 799
Good Credit – 670 – 739
Fair Credit – 580 – 669
Poor Credit – 580 or below
You must be aware of your credit score to understand the kinds of loans that are suitable for you. When you have a better understanding of your credit score, you can deal with any kind of erroneous information if any.
Your FICO credit score can be used by some lenders to examine your creditworthiness. You will be viewed as a risky borrower if you don’t have sufficient credit history or have a low credit score.
You must consider raising your credit score and applying for a loan from a traditional financial institution before you avail a loan with no credit check. This will help you get a better APR.