Loans with No Credit Check
No credit check doesn’t always mean no problems
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“If it sounds too good to be true, it probably is.”
The old adage is still applicable today, especially when it comes to no credit check loans. While loans with no credit check may seem tempting, there’s reason to be wary. Fortunately, there are other options if your credit is the greatest. These alternatives may help your financial situation while also improving your credit.
What are no credit check loans?
A no credit check loan is any sort of loan where the lender does not review your credit report before approvals. When a lender is assessing how risky it is to lend you money, they typically do a “hard inquiry” of your credit report. This means they’ve made a formal request to review your credit to determine your creditworthiness.
Loans with no credit check may be enticing to borrowers who have fair or bad credit scores. Also, if you worry another hard inquiry may damage your score, you may be considering one. Examples of no credit check loans include payday loans and title loans. In these cases, lenders use alternative criteria, such as income or collateral, in deciding whether or not to lend. These loans are often cautioned against for their predatory nature.
Be wary of loans with no credit check
Be careful about taking out this type of loan. As mentioned above, there are many that can quickly become predatory. These cases may even make your financial situation worse.
For instance, payday loans are known to have extremely short payback windows (around two weeks) and sky-high APRs around 400%! For title loans, you surrender your car title in exchange for the short-term (around 30 days) loan. Failure to meet the terms in either case could result in the lender confiscating your paycheck or your vehicle.
6 no credit check loan warning signs to consider
If you think a loan with no credit check may be right for you, there are some things you’ll want to consider:
- Is the website secure? First and foremost, you’ll want to make sure you’re on a completely secure website before sharing personal information. Check for padlock symbols near the URL or form fill boxes. Make sure the URL includes an “s” in “https” for secure. Don’t ignore or override any warnings that pop up.
- Do they have a physical address? Check the website for a physical address listing. Even online-only businesses are required to register a physical address. If they don’t have one, that could be a red flag. If they do have one, look it up on an online map to verify their location exists and isn’t a vacant lot.
- Is the lender registered in your state? The Federal Trade Commission requires lenders and loan brokers to register in the states where they conduct business. Check to see if the lender discloses their registrations on their website. Then, you can call your state’s Attorney General’s office or the department of banking or financial regulation to verify registration.
- Do they disclose fees clearly and prominently? It’s not uncommon for any sort of lender to charge fees. Some common fees include application, appraisal, credit report, and more. However, legitimate businesses will disclose these fees upfront. Make sure you get clear information about all fees required before proceeding with your application.
- Is the company a direct lender or loan aggregator? A direct lender, well, lends you money. A loan aggregator acts as a middleman. They collect your information, then shop it around to lenders who might offer a loan. Even if you never submit an application, the aggregator could collect your data through keystroke loggers. Some then turn around and sell it — sometimes for deceptive purposes.
- Are you required to make an upfront payment or pay an individual? As mentioned above, loans do come with fees. Typically, though, those fees are added onto the costs of the loan or deducted from your loan payments. If you’re asked to pay an up-front fee, make a pre-payment, provide a prepaid debit card, make a wire transfer, or pay an individual first, that’s a red flag.
Alternatives to no credit check loans
Depending on your financial situation, you may want to explore other options before taking out a no credit check loan.
Depending on your credit score and financial needs, credit cards are one option that may be a better short-term solution. The best unsecured credit cards for bad credit offer pre-qualification check so you can ensure it’s a viable solution first.
Some options to consider include:
- Indigo® Platinum Mastercard®
- Credit One Bank® Unsecured Platinum Visa®
- Total Visa® Unsecured Credit Card
Keep in mind that credit cards for bad credit do have higher interest rates — up to 25% — but that’s still a better option than 400% APR payday loans.
Affiliation-based financial institutions tend to have more forgiving guidelines compared to commercial lenders. These include credit unions or associations like USAA. You may be able to get a personal loan with a fair credit score. Credit unions are also more likely to offer smaller, short-term loans without the predatory rates and fees.
Credit unions typically offer the same financial services as commercial lenders. With credit unions, though, there may be some membership restrictions. Membership may be defined by a specific employer, geographic location, or group. Also, you may need to be a member for a set period of time before taking advantage of the benefits.
Traditional commercial lenders, like your bank, are one way to get a person loan. Anyone with less-than-perfect credit may want to consider an online lender, though. In some cases, you may find they have less strict guidelines or they offer pre-qualification checks that won’t hurt your credit.
Personal loan lenders to consider instead of a no credit check loan include:
Online lenders Avant, Credible, and OneMain Financial each offer a pre-qualification check. This gives you a better idea whether you can get a loan and for what amount based on your credit score. BadCreditLoans.com isn’t a lender, but an aggregator. They’ll show you all of your possible options and rate with no obligation on your end.
Building your credit score
Before taking out a no credit check loan, ask yourself why. Is your credit score bad or nonexistent? Then it may be worth your effort to begin building up your score. Each of our alternative options can help to build your credit score with responsible use.
Your FICO® Score is made up of five components:
- Payment history – 35%
- Amounts owed – 30%
- Length of credit history – 15%
- Credit mix – 10%
- New credit – 10%
More than two-thirds of your credit score is based on your payment history and the amounts you owe. This means that two of the most important things you can do are make payments on time and in full each month.
Credit cards and loans are different types of debt — revolving vs. installment, respectively. However, making consistent, full payments to either can grow your credit score over time. No credit check loans, on the other hand, typically do not help your credit score because of the short timeframe.
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