For some bad credit borrowers, the chances of getting loan approval are so low that there is a preference to hide their credit history if at all possible. But even for this category of applicant there are loan opportunities, with the possibility of getting a personal loan with no credit checks carried out by the lender.
As with all loan products, there are pros and cons to such a loan option, but there is little doubt that it provides borrowers with a chance to secure approval with bad credit and vital funds to deal with financial and debt problems.
However, it would be inaccurate to describe any personal loan granted after an approval process that does not feature credit checking as the most affordable loan option. There are extra costs and higher interest rates, amongst other compromises, to accept. But the extra expense can be worthwhile.
Advantages Of No Credit Checks
For lenders, granting a personal loan with no credit check carried out means they are willing to accept 100% of the risk. This is a very obvious advantage, with applicants not required to provide any form of collateral in order be approved. And there are other advantages to seeking this kind of loan too.
For one, the fact that past credit issues are overlooked means that for those with a very poor credit rating, the interest rate and other loan terms are generally an improvement on the terms usually offered. Securing approval with bad credit is nothing strange, but for some applicants, the interest charged makes the repayment too expensive.
But perhaps ultimately, the fact is that for those applicants with extremely low credit ratings, there is still a chance to source some loan funds. A personal loan, even an expensive one, provides a chance to rebuild a credit status.
Disadvantages of No Credit Checks
Of course, there is no such thing as a free lunch, so even if the advantages of getting a personal loan with no credit check are considerable, there are compromises that need to be accepted too. Not least is the expense that those with average credit scores have to face.
In order to make approving a loan without carrying out credit checks viable, the lender will charge higher interest rates than normal. These rates are set for everyone, with no adjustment for actual scores. The idea is that the attraction of approval with bad credit will attract those with scores that are extremely low.
However, this means that those who may get a personal loan with slightly better terms must forgo that opportunity. So, someone who might get an APR of 10% elsewhere but has a poor chance of approval must accept 14% in return for near-certain approval.
Qualifying For A Loan
There are no special requirements when it comes to qualifying to apply for a personal loan with no credit check. But there are some limits in terms of the size of the loan that a lender is willing to ignore a credit history for. Usually, the loan sum is relatively low, with maximum amounts of about $10,000.
The basic criteria, however, are the same as for any other loan, with all applicants needing to be over the age of 18, and being either a US citizen or a legal long-term resident. In order to secure approval with bad credit, there is also an obvious need to prove a reliable source of income.
And since funds from an approved personal loan need to be transferred to a bank account, and usually repayments are taken directly from the account, there is a need to have a working deposit account.