Loans with No Credit Check
No credit check doesn’t always mean no problems.
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You’ve got bills piling up and need more money. But unfortunately, somewhere along the way, you managed to screw up your credit score by either not making payments on time, owing too much money, or attempting to open too many new credit cards. So what are your options?
There are several lenders that offer loans with no credit check. Sounds like a great solution, right? Before you give these lenders all your information and accept their money, you may want to read more about these no credit check loans, calculate how much they’ll actually cost you, take a look at some alternative options, and come up with a plan to build your credit. After all, the old adage is still applicable today: If it sounds too good to be true, it probably is.
Check Your Personal Loan Rates
Answer a few questions to see which personal loans you pre-qualify for. The process is quick and easy, and it will not impact your credit score.
What are no credit check loans?
When you apply for a loan from a traditional lender, like your bank, they will do a “hard inquiry” of your credit report; this means they will make a formal request to view your credit history. With this information, they determine your creditworthiness and risk. A no credit check loan is a loan where the lender does not review your credit report and instead, looks at other factors before giving you money.
A no credit check loan may be enticing to borrowers who have fair or bad credit scores (if your credit score is 669 or below, you fall into this category). And if you are worried that another hard inquiry may damage your score, you may be intrigued by these no credit check options.
Examples of no credit check loans include payday loans and cash advances, title loans, and personal installment loans from certain online lenders. 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 and in some cases, many even make your financial situation worse.
How do no credit check loans work?
No credit check loans are typically short-term loans and, as mentioned above, fall into three categories: payday loans, title loans, and personal installment loans. So how does each one work?
Payday loans are known to have extremely short payback windows (around two weeks) and sky-high APRs (around 400%). You basically pay a fee to borrow money, and then pay that money back as soon as you get paid by your employer, hence the name “payday” loan.
You should choose this option only if you absolutely cannot get your hands on money any other way, your credit cards can’t cover it, and/or your loan application has already been rejected from your bank.
Let’s say you need $400 to cover the cost of a car repair or part of your monthly rent. You would write a check for $400 the payday loan fee–we’ll say $50 in this example–and give it to the lender. The lender will keep your check and give you $400 in cash.
In two weeks, you need to repay the lender. So you bring them $450 in cash and they give you the check back. You paid $50 to borrow money. But what if you can’t pay back the amount in two weeks? You can roll over the loan – usually for an additional fee — and if your payday loan has a typical APR of 400%, and it takes you one year to pay off, you’ll end up paying $1,250 in interest. That $400 just cost you a lot of money.
With a title loan, you surrender your car title (or motorcycle, boat, or RV title) in exchange for a short-term loan (typically around 30 days) loan. To qualify for a title loan, you need to own the title to your car; if you’re still paying off your vehicle, you probably won’t qualify.
Like payday loans, title loans can have extremely high APRs (like 300%), and lenders will charge a fee. But these loans come with an even greater risk: losing your vehicle if you can’t repay the loan.
The amount you borrow is based on your car’s worth, but lenders usually only let you borrow a percentage of that value. So even if your car is worth $10,000, you might only be able to borrow $2,500. Add on a 20% monthly fee, and the loan costs you $3,000.
But again, if you can’t pay it back within the month? Not only does the high APR kick in, but eventually, the lender can confiscate your car.
Personal Installment Loans
Several online lenders advertise personal installment loans with no credit check. These loans can vary in amount, but usually don’t go above $5,000. And like payday loans and title loans, they tend to have incredibly high APRs; at the end of the day, it is going to be very expensive to borrow this money.
Requirements for these loans are typically minimal: You must be employed, older than 18, paid through direct deposit, and have had your bank account for a few months. But with an APR of 140%, if you borrow $1,500 and make monthly payments over six months? You’ll end up paying roughly $2,200 for the loan.
What should I consider before applying for a no credit check loan?
The Federal Trade Commission does caution against both payday loans and title loans, and their website explains how these no credit check loans work as well as some alternative ways to borrow money.
If you think a loan with no credit check may be right for you, there are some things you’ll want to consider before you apply and borrow money:
- Is the website secure? Check for padlock symbols and make sure the URL includes an “s” in “https,” for secure. Don’t ignore or override any browser warnings that pop up.
- Does the lender have a physical address? 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, check that their location exists and that it 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. You can also call your state’s Attorney General’s office to verify registration.
- Are fees clearly disclosed? Common fees include application, appraisal, credit report, and more. Legitimate businesses will disclose these fees upfront. Make sure you get clear information about these required fees before proceeding with your application.
- Is the company a direct lender or loan aggregator? A direct lender lends you money, while 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.
- Are you required to make an upfront payment or pay an individual? Loans come with fees, but typically they 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.
What are some alternatives to no credit check loans?
Even if you think your financial situation is in dire straits, you may want to explore other options before taking out a no credit check loan. Each of our alternative options can help to build your credit score with responsible use.
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 a 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 far better option than 400% APR payday loans.
Credit unions tend to have more forgiving guidelines compared to commercial lenders; you may be able to get a smaller, short-term loan without the predatory rates and fees even with a lower credit score.
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, and you may need to be a member for a set period of time before taking advantage of the benefits.
You can find a credit union near you using the National Credit Union Association’s search page.
Traditional commercial lenders, like your bank, are one way to get a personal loan. However, anyone with less-than-perfect credit may want to consider an online lender. In some cases, you may find they have less strict guidelines than your bank, or that they offer pre-qualification checks that won’t hurt your credit.
Some personal loan providers to consider as alternatives to a no credit check loan include:
These online lenders each offer a pre-qualification check; this gives you a better idea of whether you can get a loan–and for how much–based on your credit score.
BadCreditLoans.com is another resource to check out. They aren’t a lender, but a loan aggregator. They’ll show you all of your possible options and rates with no obligation on your end and no hard pull on your creditt. Read our full review of BadCreditLoans.com for more information.
How does my credit score affect my loan rate?
The interest rate for an unsecured loan depends largely on your credit score. If you have a good credit score, your APR will be lower than if you have bad credit. A higher APR means that you’ll end up paying more for the same loan amount, even if you pay it off on time.
Let’s say you need to borrow $1,000 and plan to pay it off over 12 months. Your monthly payments, and therefore the total amount repaid, will be higher if you have a bad credit score and, as a result, a higher APR.
|Credit Score||Sample APR||Monthly Payment||Total Interest||Total Paid for $1,000 Loan
|No credit check||400%||$334||$2,450||$4,130|
Sample APRs, monthly payments, and total interest paid based on Bankrate’s Personal Loan Rates and Personal Loan Calculator.
How can I improve my credit score?
If you’re considering a no credit check loan because your credit score is bad or nonexistent, then it may be worth your effort to begin building (or rebuilding) your credit score.
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 the most important thing you can do to help your credit is to make consistent payments on time and in full each month.
Credit cards and loans are different types of debt — revolving vs. installment debt, respectively. However, making consistent, full payments to either can grow your credit score over time. No credit check loans, on the other hand, typically don’t help your credit score because of the short repayment timeframe.
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