What Are No Credit Check Loans?
Taking out a loan with bad or no credit can be challenging. Lenders tend to run a credit check before they let you borrow money, and if you have bad or no credit, your application on a traditional loan may be denied.
But, you might be wondering if you can take out a loan without a credit check. Yes, it’s possible, and you may have a few options; however, it’s best to be cautious.
Check Your Credit Score and Report
Check your credit report first before you look for a lender that offers a loan without a credit check. If you are new to this process, you might find that your score and report are eligible for a personal loan.
There are three consumer credit bureaus (Equifax, Experian, TransUnion), and not all lenders take advantage of the same scoring model. Many use a FICO score to assess your loan applications. So, checking your FICO score can give you a glimpse of where you stand in your credit score range.
If you are not in an emergency, you may choose to improve your credit score. A higher score can help you land a personal loan with high loan amounts and favorable terms.
Loans With No Credit Check
Some borrowers look for a loan without a credit check because they may have no credit at all. On the other hand, some people know that they will not get approved for a personal loan with a credit check due to a bad credit score. These are critical distinctions.
Personal loans tend to be unsecured. It means that they don’t require you to pledge any collateral. Because of this, lenders want to evaluate your financial information and credit history to make sure that you can afford to pay back the loan.
You can find many lenders for no credit check loans. However, many of them charge high fees and interest rates. That’s why you need to be on your guard for such lenders. Find a reputable lender who won’t take advantage of you as a borrower just because you have poor credit or no credit score.
The following are loans with no credit check:
- Payday Loan: Payday loans are instant loans. This type of loan can let you borrow quickly in small amounts (mostly a few hundred dollars) with no credit check. Payday loans have a short repayment period that runs within two weeks or by your next payday.
- Title Loan: Another type of loan that usually doesn’t require a credit check is a title loan. It’s a secured loan, which usually requires you to pledge your vehicle’s title as collateral for the lender to let you borrow money.
- Pawn Loan: To take out a pawn loan, you will have to take a valuable item to a pawn shop dealer. The pawn shop lender will then determine the item’s worth, offer you a loan amount, then use the valuable item as collateral. Most of the time, pawn loans tend to have a 30 day repayment period.
No Credit Check Loan Alternatives
If you think that a loan with no credit check is not right for you, you may want to consider the following alternatives:
- Payday Loan Alternatives
Federal credit unions tend to offer payday loan alternatives to members who need cash. The loan amount tends to range from 200 to 1,000 dollars. Its repayment term is usually from one to six months.
- Co-signed Loan
If you can’t get approved for a traditional personal loan, you might get a better chance if you have a cosigner with a good credit score. However, this might be challenging for you if you have a history of defaulting on your loan payments. That’s because a cosigner is considered co-responsible for your loan payments; they will be on the hook if you fail to pay back your loan.
- Online Lenders
Several online lenders specialize in loans for people with bad credit. These lenders don’t even charge excessive fees and interest rates. The key here is to shop around and look for the best lender to help you out with a loan that best fits your needs.
To Sum It Up
If you are applying for a traditional loan, it’s expected that lenders will run a credit check to evaluate if you can pay back the loan in the future. So, if you have poor or no credit, it will be very challenging for you to get your loan application approved. Lucky for you, there are a few options available with no credit check loans.