Did you experience a financial set back in the past that brought your credit score down? Did it bring your credit score down by a lot?
You are not alone. An average of 12% of the population in the US has a FICO score below 550. But having low credit doesn’t mean you can’t get a loan.
If a credit check is the only thing standing between you and a personal loan, keep reading to learn how to secure a loan with no credit check!
What is a No Credit Check Loan?
Simply put, a no credit check loan means you’re able to take out a loan without the lender running a hard inquiry into your credit score. These loans often have lower loan amounts and might have higher interest rates than other loans.
Applying for a no credit check loan does not mean you are guaranteed to be approved. Other factors like income and tax returns are used as a means of securing the loan.
Strategies for Getting a Loan Without a Credit Check
When applying for a loan, it’s important to be prepared and know that you’ll need to prove that you will pay back the loan. Having documents gathered that show you are financially stable and have a history of stability will go a long way in getting loan approval.
Some paperwork to prepare includes tax returns and employment history through pay stubs since these both show a history of employment and stability. Bank statements and other records can also help you get approved.
Also, prepare any borrowing history. This is especially true if you have good standing with paying back a loan from your past, like a student loan or mortgage.
Once you’ve gathered your documents, you should consider approaching the lender directly. Whether it’s a bank or another type of lender, having no credit or bad credit means that you will want to prove you are able to pay back a loan, which you can do directly.
Ask the lender to use alternative data and other indications to prove you are able to pay back the loan. You can also seek out institutions that typically give no credit check loans.
Where Can You Get a No Credit Check Loan?
There are several options for lenders of no credit check loans, like payday lenders, online lenders, and credit unions. While you sort through the options below, be sure to keep an eye out for any red flags.
Be cautious when looking for a no credit check loan, as you don’t want to get caught in any type of scam. Do research on the loan before accepting anything.
Also, you will likely find a lot of high APRs, meaning the interest could affect you greatly in the future when trying to pay it back.
The first type of lender who typically offers no credit check loans is a payday lender. These lenders will loan you money, which you will be expected to pay back with your next paycheck. These small payday loans are typically around $500 or less, and might have a high APR and fees.
These lenders may allow you to take out a loan without running your credit score. You may also be able to take out a title loan, by giving the title of your car. This is then used as collateral.
Research Online Lenders
Online lenders, which typically partner with companies like Experian, usually offer loan options for people who have no or bad credit history. In these cases, they may run your credit score, but will use other information in your financial history to make a decision about a loan.
Take the time to do research and learn which online lenders offer the best options with the lowest fees and interest rates.
Credit unions are reliable institutions for getting a loan. A credit union might be willing to use information that doesn’t include your credit score for approving your loan application.
You will need to be a member of a credit union to seek a loan from them. Becoming a member is usually based on your place of employment, if you’re a part of a particular organization or even where you live. Start by seeking membership to a credit union and ask if you qualify.
Pawn Shop Option
A lesser-known option for seeking a loan that doesn’t rely on your credit score is using a pawn shop. Some pawn shops allow people to pawn something they own that is of value, in return for a loan.
These types of loans could be 20% to 60% of the value of the item you are “selling” or pawning. At that point, the shop might keep the item and not sell for a certain time.
If you’re able to pay the loan and the interest accrued, you could receive the item. The pawn shop is also secured based on the value and can sell the item.
Use This Guide to Find a Loan With No Credit Check
By using the tips above, you’ll be able to find a loan with no credit check, but it’s important to find the right one for you. Whichever option you pursue, remember to keep interest rates and other fees in mind when making your decision.
If getting a loan without a credit check isn’t the only financial advice you need, keep reading more from our blog! We have all the info you need on everything from financial advice to health and lifestyle!