One of the top ways consumers cover unexpected expenses like unpaid medical or utility bills is via no credit check loans. However, one can often get trapped by engaging with predatory lenders advertising false promises, 400% APRs, short repayment terms, and limited to no flexibility.
Fortunately, there are much better options out there. Today, a good amount of no credit check loans come from legit sources, mainly our recommended lending networks. Lending networks like MoneyMutual and FundsJoy feature hundreds of participating direct lenders willing to beat your payday, auto title, and pawn shop loan’s best offer (practically non-existent!)
Continue reading to learn more about how to get no credit check loans from the right lender, including what no credit check loans are, alternatives to traditional credit check loans, and how to find the right lender for your needs.
What Are No Credit Check Loans?
One of the best and most efficient ways for bad credit borrowers to seek financing is through no credit check loans. No credit check loans base your eligibility on your income, debt-to-income ratio, and employment record rather than a minimum required credit score.
There are several types of no credit check loans, including but not limited to payday, auto title, pawn shop, and installment loans.
Today, there are much healthier options than these traditional loan types. Whereas payday, auto title, and pawnshop loans charge upwards of 300% and 400% APRs, online lenders from reputable lending networks like MoneyMutual and FundsJoy offer higher borrowing limits, sub 35.99% APRs,and much more flexible repayment terms with no origination or prepayment penalties (exceptions apply).
Given the increased risk of lending to bad credit borrowers with FICO scores in the 300 to 580 range, no credit check loans typically come with higher interest rates and fees with a high total cost of borrowing if minimum monthly payments are not met. Remember, borrowers within this range either have limited to no credit history or a history of late payments, collections, and other damaging marks on their record.
In short, no credit check loans may offer excellent borrowing opportunities for borrowers who would prefer not to be judged based on their credit history.
Alternatives to Traditional No Credit Check Loans
No credit check loans are not always the answer to pressing expenses.
Three excellent alternatives to no credit check loans include Buy Now, Pay Later (BNPL) services, payday alternative loans from credit unions, and 0% interest cash advance apps.
BNPL. Buy Now, Pay Later (BNPL) services like Affirm and Afterpay offer an excellent way to purchase goods at participating e-commerce retailers, allowing large balances to be split into multiple interest-free installments, typically over six weeks. To use them, visit a participating retailer, go to the checkout process, and choose the BNPL provider as your payment method. All you need to do is make an initial payment and choose a repayment schedule.
With BNPL services, expect a quicker approval process and traditional credit applications.
Payday Alternative Loans (PAL). A PAL may be in the cards if you want stronger backing. Compared to traditional payday loans, they are subject to National Credit Union Administration (NCUA) regulations with lower interest rates/fees.
PAL loan amounts typically go from $100 to $2,000 with repayment terms of up to 12 months. Credit unions may or may not report on-time payments or credit bureaus.
To take out a PAL, you must be a credit union member. Every credit union has its own membership requirements, e.g., belonging to a specific trade organization. For example, the Pentagon Federal Credit Union (PenFed) is popular with current and former military personnel.
0% Interest Cash Advance Apps. 0% interest cash advance apps like Earnin, Brigit, and Dave allow users access to a percentage of their earned wages before the next paycheck. All you need to do is link your bank account and provide employment information before requesting an advance, which can be used for anything from paying late fees to unexpected medical bills.
The main benefits of 0% interest paycheck advance apps include 0% interest, no fees, no minimum required credit score, and none of the outrageous high borrowing costs that traditional payday, auto title, and pawnshop loans are known for.
In short, BNPL services, payday alternative loans, and 0% interest cash advance apps are three excellent lower-cost alternatives to pay for larger e-commerce purchases and cover paycheck gaps.
Dealing with Bad Credit: A Discussion
Dealing with bad credit well can be one of the best financial decisions you will ever make. Failure to do so will result in difficulty obtaining credit with higher-than-average interest rates and shorter repayment terms on all loans.
Here are three time-tested strategies to boost your credit score in no time:
Quick Pre-Loan Score Boost. We recommend boosting your credit score before applying for any no credit check loan. Even an 80-point increase could pay immediate dividends, cutting a 34.99% APR to a 25% APR. Ways to do it include disputing credit reporting errors on your reports, lowering your credit utilization ratio, and even requesting a higher credit limit on your credit card to lower your credit utilization ratio (as long as spending remains the same).
Expense Tracking. To avoid taking out no credit check loans in the first place, one area where you need to improve is expense tracking. Apps like Mint.com allow you to budget and set goals, working to help allocate your resources better. Amongst some of its finest features include bill reminders, categorization of transactions, and bank-level security measures to keep your financial data safe.
Managing A Healthy Monthly Budget. One of the biggest reasons people take out no credit check loans is due to a lack of spending awareness. Establishing a budget will help you better manage and reduce debt. With a strategy, you’ll be forced to devote a percentage of your income towards that repayment, which may apply to credit cards, loans, and other balances.
Plus, it also means emergency preparedness. We recommend establishing an emergency fund with at least six months’ worth of expenses to have an ideal safety net in case you become unemployed or incapacitated.
How to Secure No Credit Check Loans from a Reputable Lender
Here’s a brief step-by-step guide on how to secure no credit check loans from reputable lenders:
Understand Different No Credit Check Lending Opportunities. The first step to securing new credit check loans from reputable lenders is to understand the landscape in the first place. Options you may be exposed to include but are not limited to payday, auto title, pawn shop, and installment loans. Each has its maximum APRs, repayment terms, and eligibility criteria.
Keep in mind that no credit check loan should not be used in all cases where you need to meet an emergency expense. Alternative lending options include 0% interest cash advance apps, payday alternative loans from credit unions, and BNPL services for large e-commerce purchases.
Consider a Lending Network. Unlike direct lenders like banks, credit unions, and some online lenders, intermediaries like MoneyMutual and ZippyLoan feature hundreds of participating direct lenders willing to extend you favorable rates and terms. Rather than outrageous 400% APRs, you can enjoy sub 35.99% APRs, longer repayment terms, and no origination of prepayment penalties — even with a limited to no credit history or with scores in the 300 to 580 range.
Research Reputable Direct Lenders. The next step is researching reputable lenders by checking for third-party reviews, especially from trusted websites like Trustpilot and the Better Business Bureau. Be sure to type in your direct lender’s name on Google to get the information you need.
Submit a Loan Request. Once you have identified a minimum of two lending networks, feel free to submit a loan request form. It should take no more than five minutes and only asks for your personal and financial information, which is used to match you with legit direct lenders ready to offer you your desired loan amount or close to it.
Remember that you will not likely be eligible for the maximum lending amount these lending networks offer. For example, 100Lenders and MarketLoans advertise bad credit loans up to $40,000, but the majority of lenders will only extend up to $10,000.
By following the steps above, you’ll be on your way to finding competitive, no credit check loans with fair rates and terms you can live with.
Costly Pitfalls: No Credit Check Loans to Steer Clear Of
Not all loans are considered equal in the world of no credit check loans.
Three loans that come to mind are payday, auto title, and pawnshop loans. Let’s discuss each of these types of loans and why we do not recommend them:
Payday Loans. Arguably the loan type with the worst reputation of all, traditional payday loans from your local cash advance place are simply a predatory debt trap with exorbitant interest rates (400%+ APRs), ultra-short repayment terms, lack of underwriting, excessive rollovers and renewals of which could sum up more than the actual principal owed over time.
Although payday loans are a type of unsecured loan, that’s barely a consolation prize.
Auto Title Loans. Unlike payday loans, auto title loans are secured loans that require putting up your vehicle as collateral. For the privilege of paying 300% APRs, your vehicle’s title is put on the line, where any failure to repay the debt can force a lender to repossess your car.
On top of a lack of regulation and outrageously high costs with limited consumer protections, we recommend avoiding auto title loans.
Pawnshop Loans. The third type of predatory loan we highly discourage is pawnshop loans. Like auto title loans, pawn shop loans are also unsecured loans, only with jewelry and other smaller possessions used as collateral. It offers the same 300%+ APRs, shorter repayment terms, and a high risk of having your assets possessed and resold. They are also less regulated with limited consumer protections, a magnet for unfair lending practices.
In short, getting no credit check loans from the right lender is very easy. All you need to do is be aware of reputable lending Networks and what constitutes fair rates and terms. Although you will never qualify for the 8% APRs enjoyed by those with excellent to very good credit, you can enjoy other comparable benefits from legit direct lenders from our recommended online marketplaces.