Should You Consider No Credit Check Loans for Fulfilling Your Personal Needs?
Nobody can ignore the fact that many people have financial statuses that make it difficult to receive any familiar kind of loan. Their fiscal reality comprises of low income, bad or low credit score, payment(s) defaulting, and meager or no savings. As a result, they are unable to meet their present personal needs.
On top of that, if an emergency such as a medical fee or a bike repair arises, the capacity to fulfill even the regular or monthly needs can become almost nil. In such a situation, it becomes essential to look for personal loans with no credit check. However, is it safe to take such a loan?
Well, it's precisely for these (and many other reasons) that no credit check loans, just may be the saving grace you need!
After all, who will be ready to lend in absence of bad credit? It sounds too good to be true, right? While this can make you suspicious and conscious, not all such offers are so. The key to right lender is to have the right knowledge and apply it at right time. So, let’s gain this knowledge now!
Why a Credit Check is Generally Very Important for Lending
Before you move ahead to know about no credit loans, it is essential to know the importance of credit checking. This know-how gives a complete understanding of credit checking works and how it impacts the overall credit rating of a borrower.
It also conveys the difference between credit check and no credit check so that you know how to boost your financial situation instead of hurting it. Usually, each time a lender checks the credit history or rating, the borrower’s score goes down.
Are you surprised to know this fact and feel unfair? Well, checking for credit dings the score, as it is happening for borrowing money. This negatively impacts the score and makes it more difficult to get a big sum.
Moreover, several traditional mediums such as financial institutions go for a hard credit inquiry while assessing your creditability. In simple words, they are evaluating your credit report, score, and history to find out the degree of risk involved in lending money to that borrower. Okay, this seems acceptable but then how does it ding your credit?
Well, here is how:
Several hard inquiries happen so quickly that it is often considered as an indicator of your impulsiveness to get money. This creates an illusion that you are either misusing the money you have or are accruing more liability without paying the current liabilities. This makes you seem risky, which finally reduces the credit score.
Still, many borrowers get rid of it when:
There is a need of quick cash! Yes, when you are looking for some instant loan to fulfill personal needs, it is obvious to be only concerned about obtaining the sum and preventing a hard credit inquiry from lowering your score.
This is when a no credit check loan seems to be the option that you need. However, do not simply run for it just because there is no credit check. You need to be vigilant, knowledgeable, and careful, as many types of such loans exist and not all are reliable.
The Relief that No Credit Check Loans Provide
"Weak" or "bad" credit, generally consists of a Fair, Isaac and Company (FICO) score of any number below 620. If you have such a score, it may get tough to get a loan from a traditional medium such as a bank or an online commercial company.
So, when all options of borrowing become unavailable or illegible, then a no credit loan on offer by a private lender is the only option that is left as well as seems alluring. As the name indicates, no credit check loans are types of non credit-based money loans that a lender provides for a short period without checking the borrower’s credit history, score, or report.
Interestingly, there are private and organizational lenders that are prepared to waive off the credit checking process for lending up to some amount. This results in an ideal solution for people with bad credit history due to which they cannot obtain loans online through any other means.
Most of these offers are personal loans with no credit check, primarily as they are for those individuals who have personal monetary issues. Instead of checking credit history and scores, these providers take into account other aspects to counterbalance the lending risk.
When No Credit Check Loans Can Help
Before the introduction of no credit loans offers, borrowers used to follow the standard procedure of obtaining money as a loan. In this procedure, it is obvious for a lender to check their credit history. It is governing factor in determining the following aspects or decisions:
- To give the loan or not
- The total sum
- Interest rate
- Collaterals, if required
- Term of repayment
- Other loan conditions
For checking the credit history, the concerned lender takes a glance of the former credit transactions including payment of dues. To do so, the lender contacts a credit reporting agency who provides this information.
If all is acceptable, the lender approves the loan request. Why? This is because the credit information convinces that the borrower is capable of paying the lent money back.
However, such a good situation is not so common nowadays. Most borrowers do not have such a good credit record. They also know that it is tough to convince lenders quickly for giving the sum they need. For such borrowers, no credit check loan offers make sense.
- Poor credit history (it is different from the current bad credit score)
- No credit history
- Insufficient credit history
- Less acceptable credit history
- Privacy reasons (do not want to leak news of financial instability)
- Need of instant cash (no time to wait for or complete paperwork)
- Need of small amount
Having a bad credit history is not something to be ashamed of, as it is inevitable in case of a financial crisis. However, it is something that can prevent you from getting instant cash from traditional lenders. There are times when credit history is not that bad but there is none.
Having no credit history is also a major reason for disqualification in the world of traditional lending implementing credit check. This is because these lenders still need credit reliability. So, in such a situation, no credit check loans are ideal.
You may want some cash instantly due to which going through paperwork is unaffordable. Further, the credit check loans may or may not get an approval on the same day although most do get approved within 24 hours. However, it is risky if patience is not something that you can afford. So, here too, no credit check loan offers win.
Another situation where such an offer seems to be an ideal option is when the loan amount is low. This is because most no credit check loans come with an upper limit, which is around $2000. However, some lenders may also offer but it does not cross $15000.
When Should "No Credit Check Loans" NOT be Sought After?
No lender will get easily ready to lend you without any assurance of getting the loan back. This is because they are not into the lending business to lose money.
So, if a lender is ready to lend you without a credit check or inspection, it should be for a price. Thus, you need to know the price before making a request for a loan.
The fact is that these lenders usually charge a high rate of interest as well as some fee, the sum of which together acts as a compensation for the involved risk. So, go for personal loans no credit check only when you are out of all options and do not have luxurious desires to fulfill.
These loans are ideal for fulfilling needs, not wants or luxuries. For example, you may consider online loans if there is a home repair that you cannot delay or avoid.
It also makes sense to get such a loan for paying off some bills or paying for fixing an issue in a car. Moreover, just ensure that you are not idle and have a source of income to repay them back on time.
Some other conditions in which these loans are not useful are too high-interest rates and good credit history. Both these factors push you to look for options with low rates.
The Myths Regarding No Credit Check Personal Loans
A personal loan without a credit check seems to be a straightforward option for fulfilling a sudden expense or a financial emergency. However, most people have developed some misconceptions regarding these loans that offer instant cash. It is important to be aware of them in selecting the right loan offer:
I Have No Option Other Than No Credit Check Loans
If your credit history and score are not persuading, it is obvious to think that a traditional loan is not for you. You consequently leave aside all options and directly try for no credit check loans. Well, what you must understand here is that these loans are for very short term.
If you cannot pay them in a short time, it is wise to try for a traditional unsecured loan for fulfilling personal needs. There are lenders who lend to people with bad credit. However, they charge a bit higher interest rate or give a smaller amount than someone with a good credit.
Still, the chances are high for you to get a lower rate of interest than that for a no credit one. Even fees are likely to be lower. This optional is only feasible if you get a traditional personal loan lender and can wait for some time to obtain the amount.
Virtually Anyone Can Get No Credit Check Loans!
The operative word, is "virtually". While many people think that everyone with bad or low credit can obtain no credit check loans, regardless of any conditions, the truth is different -- though only SLIGHTLY. It is very quick and easy to get approved, however, some conditions do need to be met. Mostly, such conditions are things such as having a job for at least 90 days, being a US Citizen, earning more than or equal to $1,000/month, and having an active bank account. Simple conditions for most people.
While they may apply, the approval remains in the hands of the lender who considers some criteria for giving the loan. On the official site, you can see a fine print that says a cash advance can be declined in case there are no means to earn income or there are records of defaulting on former transactions.
This means that while credit history is not checked, the history of defaulting and current financial status significantly matter. After all, this is what makes such lenders reliable, as this is how they secure themselves against risks.
Submitting the "No Credit Check Loans" Application Form...
Simply completing a form and submitting it does not indicate approval or money guarantee. In fact, as per the Federal Trade Commission (FTC), a legitimate lender shall never assure you money. Such lenders do not promise that you will qualify for the loan prior to applying for it and receiving approval for it.
Most of them have a policy of lending a small amount to those applicants who request for a big amount has been declined. This is another sign of their legitimacy.
There Is no Limit on the Borrowing Sum
No! This is not right. There is an upper limit for the sum a borrower can take at a time. In most cases, this is mostly $2000 although it can cross $10,000 in case of a few online lenders. There is no need to doubt these high paying lenders, as they have their own terms and conditions, which are beneficial to them and you, both.
You Will Drop Some Credit Score Points Upon Receiving No Credit Check Loans
No, this is not true. Many feel that applying for a no credit loan is likely to reduce their credit score or rating. However, if you see the official sites of the lenders, they mention it clearly that credit score or rating is not affected by applying for a loan here. So, this is a fact.
My Credit Rating or Score Increases
Well, this is dependent on a condition. If you wish to boost your credit, it is essential to ensure that a no credit check loans provider reports your repayment record to the credit bureaus.
Otherwise, your credit rating may never get a boost although you may be getting quick cash and repaying them on time. You can go for an unsecured loan offer, repay it on time that is usually short, and get a credit boost if the provider reports it to the bureaus.
There Are No Reliable Options
Just because your credit is bad does not qualify you for a fraud or cheat. Believe me, not all credit providers intend a scam. There are genuine providers out there who are into the business of giving loans without checking the credit report. The key is to find the most suitable as well as reliable one here.
Such lenders are transparent enough to disclose all risks and costs. They also do not make too optimistic promises or give such assurances. They do not lend without knowing about your personal and employment lives.
Further, their offers do not seem too cheap because these loans are risky. So, if you are not coming across some significant interest rate or processing fees, you are being kept away from the real picture. Lending and borrowing are safe even online, provided transparency rules the deal.
Numerous Fees Exist
Many people think that there are many fees to pay if a no credit check loan is approved. However, this is not the fact. The truth is that you might have to give application fee, which is informed to you upfront.
There are many online lenders who charge you this fee only if the loan is approved. Others may charge you some other fees but they need to state it clearly. In short, there should not be any hidden charges.
Similarly, it is a myth to believe that there are several fees to pay. Thus, do not apply for a loan whose terms and conditions regarding fees and repayment are unclear or vague.
Types of No Credit Check Personal Loans
- Payday Loans/Cash Advances/Payday Loans: Are for short term, given in small amounts, and do not need a collateral. There is no need to directly link to the actual payday of the user. It is useful for paying urgent, non-deferrable expenses.
- Installment Loans: Are for longer term due to installments spanning over months or years. This attracts a higher rate of interest in the long run. However, they are fine for those who cannot repay in a short period but wish to pay off some big dues such as debts and repair bills.
- Personal Loans: Are highly flexible. The borrower gets charged with different interest rates as per the borrowed amount. You just stick to the borrowing limits.
Understanding the Working of Online Personal Loans with No Credit Check
Most of the online providers do not work as direct lenders. They run a network of lenders, which consists of financial companies, private individual lenders, and other agencies. So, what such providers do is that they just connect a borrower to the right type of lender who is willing to offer the proposed sum.
Once you submit the loan application, the provider shortlists or chooses the right lender as per your request. Then, you are taken to the official site of that lender to know the terms and conditions of the offer. If you agree, you are asked to sign the agreement digitally. These steps occur within a few minutes of your application submission.
Finally, the loan amount is credited directly to your bank account by the next business day. The repayment term is also flexible enough to be between 1 to 36 months.
On such a site, for any lender to lend, it is required for you to fulfill the following criteria:
- 18 in age (No lending to minors for obvious reasons)
- Permanent resident or citizen
- A source of income of employment (since some time, for example 6 months, which varies from one lender to another)
- Valid checking account in a bank
- Valid e-mail ID
Age and citizenship are mandatory criteria to fulfill for security reasons. In many cases, employment since three months makes a borrower eligible, as it acts as an indicator of the ability to repay. This is a lenient criterion and need not be always strict. A checking account is compulsory as a means of paying back, as there will be no credit check.
How to Choose Between No Credit Check Loans Providers
The very first factor to consider while choosing from no credit check loan lenders is legitimacy. In case of an online lender, you need to ensure integrity and trustworthiness through review portals, local government agencies, friends, and other reliable sources. Apart from legitimacy, there are some more factors to consider, especially for online lenders:
- Fees: Check out all fees, such as processing and penalty which a lender is charging and compare them with what other lenders are offering.
- Loan Terms and Amount: This criterion depends on the amount of loan you need and the way in which you will repaying it. Once you know this, you can choose the lender who is ready to provide that amount with the desired terms. Consider whether you wish to pay the sum at once or in installments. This will also help you in choosing a suitable lender. Remember, both these factors will influence the rate of interest. Each lender in a network of a provider differs in loan terms and conditions. A few have lower maximum loan limit with flexible repayment terms, while some have shorter or longer terms. Well, there is no rule for choosing the right one from these lenders. However, you can choose the one whose all terms and conditions are suitable for you.
- Fine Print: This is something most borrowers ignore, which is why they end up paying more unnecessarily. This fine print is much like a blueprint without which you just cannot know who is offering what.
Do not overpay when it comes to acquiring a no credit check loan. Just get it, pay it, and boost your credibility!