No-Credit-Check Loans: Consider These Alternatives First

Nobody wants the ‘bad credit’ status voluntarily, but sometimes it happens to the best of us. It may be due to purely financial mismanagement, but it may just as well be the result of the difficulties of life. A divorce, the onset of a serious illness or a career crisis can rapidly turn good credit into bad credit. Fortunately, loan options may still be available if you have a bad credit. They may not be on the best terms, but they can be useful when absolutely necessary.

What is a loan without credit check?

As the name suggests, a loan without a credit check is a loan you can get without a credit check. Most banks and other lenders require you to undergo a credit check before you receive a loan. Each individual bank has its own requirements for loan eligibility. If your score is too low, some lenders may see you as a “risky” borrower. Usually, anyone with a credit score below 580 has a very poor creditworthiness. If your score is below 580, you may want to look for a loan without a credit check and pay close attention to the conditions of your loan. Most of the loans that do not require credit checks are personal loans. A personal loan is money that you borrow from a bank, credit union or other type of lender that you repay over time. Unlike other types of loans, you can use a personal loan for almost anything you want. Of course, you should always take a good look at the conditions of a loan to avoid paying too much, which can cause you even more problems.

Lenders to be treated with care

There are several places where you can get a loan without a credit check. These include flash credit providers, pawnshops and friends or relatives. None of them are ideal and you should be very careful when choosing one of these ‘moneylenders’.

Flash credit providers
These are predatory loans, specially designed for people with poor creditworthiness. That is why they are best avoided. In short, they offer a loan advance at your next salary. The interest can be higher than 300 percent and they need access to your bank account to withdraw money when your next salary comes in. If you do not get paid and pay off the flash credit, things can end badly.

Pawnshops
When you ‘pawn’ something valuable, the lender gives you 20% to 60% of its value in cash as a loan. The store stores that item but does not sell it for a certain period of time, usually several months. If the owner of the item pays back the loan, along with monthly interest (2% to 25% or more, depending on the state), they get their item back. If not, the pawnshop can sell it.

Loans from family or friends
A family member or friend does not have the option to thoroughly check your creditworthiness. And they might be willing to give you a loan, even if your credit is bad. However, it is important to handle such a loan as professionally as with a bank.

Where can I safely get a loan, even with bad credit?

Loan aggregators: these can be a good source of financing if you have bad credit. Loan aggregators are not direct lenders, but a large number of lenders participating in platforms. Because they serve all credit levels, you may be able to get a loan, even with bad credit. You fill in a loan application and lenders who lend to your credit profile will be able to make offers.

Peer-to-peer loan: applying for a P2P loan may be slightly more complicated than other credit platforms due to proprietary rating systems for borrowers. Essentially, peer-to-peer networks often use internal acceptance systems that look beyond credit scores to get a better picture of your financial risk. You may need to answer specific questions about what you plan to do with the money, as well as provide information about your education and work background. As a result of their more comprehensive assessment statistics, some P2P networks may have lower credit requirements than traditional lenders and may be a potential financing solution for people with bad credit to find a loan.

Insured personal loan: instead of trying to get a loan from a shady lender who will impose huge interest rates on you, opt for an insured loan from a reputable lender. Even though the lender checks your credit, you should still be able to be approved with a bad credit because you have to provide security. There are some large banks on the market that offer insured personal loans.

Before you consider a loan without a credit check, it’s a good idea to first make sure that you really don’t stand a chance of getting an ordinary personal loan. Your odds may even be better than you think, because there are plenty of personal loan providers who will consider people with bad creditworthiness. We recommend that you first do your own research online and compare different loan options to suit your needs.