Certain financial institutions have made it possible to qualify for a loan despite your credit rating.
Sometimes referred to as a no-credit-check loan these can be an excellent option when you’re looking to get yourself a loan quickly and with the help of technology can be easily accomplished. Let’s take a look below at some key items to note about a no-credit-check loan.
How is a no-credit-check loan possible?
Traditional loans require a background check that includes a review of your credit history and current score. Your credit score would be their main focus. It’d be the source of information they would use to make a decision on whether to approve you for the loan or not. On the other hand a no-credit-check loan redirects their focus onto other key components such as the actual ability to repay. This comes from a check for current employment and other sources of income. Remember that these will be an alternative loan type, so you’ll want to be extra careful reading the terms and see if there are any additional fees to be concerned about on top of the rates and terms.
Are interest rates going to be higher for no-credit-check loans?
These loans are also considered a riskier option than traditional types of loans to the lenders. That means they’re going to come with typically higher rates. They can even go up to 35% in some cases, so always make sure to shop around to see what the best rates for you may be. You’ll want to understand the total cost of the loan, not just the monthly payment, as you may end up paying excessively more.
Is this a good option for those with poor credit?
A no-credit-check loan is actually catered to those who have no credit or poor credit. A mentioned earlier, that’s because there’s no real credit check but that doesn’t mean your options are going to be that limited. There are more and more lenders out there that are prepared to offer no credit check loans but do remember that it will most likely come at a higher overall cost. An important factor to bear in mind.
Is this a good loan for consolidating debt?
It’s a good loan for whatever purpose you’ll need it for. It can be used as a way to consolidate all our outstanding debts that you may have, and that can, in turn, lead to one monthly payment to get yourself debt free. You can use it for other items such as large purposes but do keep in mind you’ll still need to repay the loan back, so only borrow what you can afford, and consider this option as a way for debt consolidation as well.
What are the associated risks to know about when looking at a no-credit-check loan?
While access to such funds is becoming ever more popular, you’re going to pay a higher cost for the funds borrowed. This is due to the unique mix of terms for repayment being short, as well as higher rates. The shorter terms also come back from the mindset of the lender wanting to get their loan paid back faster due to the increased risk. But be mindful, as this can easily lead to a huge monthly payment that you may not be prepared for. Thus you end up completely focused on just paying that large debt back.
You also want to do your research into your lenders so you can ensure their legitimacy and not work with lenders that may be predatory in nature or, even worse, a complete scam that ends up costing you money.
Will my credit score improve with a no-credit-check loan?
The short answer is maybe. Typically, a no-credit-check loan means no reporting to the credit bureaus either, which means that each on-time payment may not directly affect your score. What can help your score indirectly is through debt consolidation of other types of debts. By eliminating those debts, you’ll have better credit utilization, and that will drastically improve your score sooner than you think. Also, do keep in mind that it may be your only option at the moment to go with a no-credit-check loan while you work to repair your credit history.
Disclaimer: All loans are subject to credit and underwriting approval. KreditGenius.co is an information website/blog and loan search platform, not a lender. Interest rates range from 5.99% to 34.99% and depend on the assessment of your credit profile. Loans range from $200 to $30,000, with terms from 4 months to 60 months or more. For example, on a $6,000 loan paid monthly over 12 months, a person would pay $516.64 per month for a total of $6,199.68 over the life of the loan.