Have you ever applied for a loan and literally shuddered at the idea of the lender checking your credit score? What if you could get a loan without any credit check at all?
If you need a personal loan but are among the 30 percent of Americans with bad credit, there are lots of lenders out there who will work with you and will help you get the money you need without checking your credit score.
Read on to learn more about no credit check financing and how you can get a loan with a bad credit score or even no credit score:
What Is No Credit Check Financing?
No credit check financing is a way for you to get personal loans and other types of loans without having the lender perform a hard credit check.
There are a couple of reasons why no credit check financing can be beneficial. First, if you know that your credit score is less-than-ideal, you can look into no credit check financing to increase your chances of getting approved for the loan you need.
When lenders perform a hard credit check, your credit score gets knocked down a few points. If you know that you’re on the verge of a fair and poor credit score, those few points could make a big difference.
You might want to avoid a hard credit check altogether to preserve your credit score and increase your chances of getting approved for other loans in the future.
Terms and Interest Rates
It’s important to note that no credit check loans often have higher interest rates than other loans. This is because lenders will usually consider you to be a high-risk borrower if you have a low credit score (or aren’t willing to have your credit run when you’re applying for a loan).
If you raise your credit score later on, you may be able to refinance the loan to get a lower interest rate.
Getting Approved for No Credit Check Loans
It’s true that it’s easier to get approved for a no credit check loan than it is to get approved for a traditional loan. But, there’s no guarantee that a lender will approve you for this type of loan.
There are a few steps you can take to increase your chances of getting approved, including the following:
Talk to the Lender
You’ll be more likely to get approved for a no credit check loan if you approach the lender directly.
Reach out to your bank or credit union and let them know you are interested in applying for a loan but would like them to base their decision on other factors, such as your employment history. They may not agree to this, but it never hurts to ask.
Remember, too, that credit unions are often a little more understanding than big banks. They may even have programs in place for people like you that will help you get the money you need while also building your credit.
Gather Essential Documents
Be sure to have all the essential documentation on hand when you go in to meet with a representative from your bank or credit union. Some documents you’ll need to have include:
- Your tax returns from the last two years
- Pay stubs or a copy of your employment history
- Information about your borrowing history and evidence that you’ve made progress paying off other loans or credit cards
- Documentation on your current credit card debt
- Education records
You can use these documents to make a strong case for yourself on why you deserve a loan even though your credit score is not great (or is non-existent).
Consider an Online Lender
If you’re having a hard time getting approved working with a traditional lender, consider an online lender instead.
Online lenders often have more flexible lending requirements, and they may be more willing to meet you where you’re at. Many online lenders also have better interest rates and loan terms that traditional lenders.
It may be worth looking into an online lender even if you are making progress with your bank or credit union.
Be sure to compare rates and terms from various lenders before you accept a loan. Don’t just go with the first lender who agrees to work with you. This will help you ensure you’re getting the best loan terms possible.
Tips for Paying Back Loans on Time
Once you get approved for a loan, treat that loan as an opportunity to improve your credit score. That way, you’ll have an easier time getting approved for loans in the future.
Here are some tips that will help you make sure you pay your loan back on time:
- Set reminders on your phone so you remember to make your payments on time
- Consider setting up automatic payments to come out of your checking account each month
- Whenever possible, make more than the minimum payment
- Pick up a side job so you can earn extra money and pay the loan off quicker
Be sure to monitor your credit score while you’re working on paying off your loan, too. Seeing it go up as you continue to make your payments on time will help you stay motivated.
Looking for More Financial Advice?
Now that you know more about the pros and cons of no credit check financing, are you interested in applying for this kind of loan? Or, do you want to work on improving your finances so that you can qualify for other loans with better terms and interest rates?
There are benefits and drawbacks to both of these approaches.
With a no credit check loan, you get the money you and need and can use it to start building your credit score. If you wait, you can get a loan with better rates later on, but you’ll have to delay getting the money you need for a little while.
Whichever approach interests you, we’ve got resources to help you reach your financial goals. This article on changing your life by changing your finances is a great place to start.