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Loans without credit check: borrowing options and alternatives

A no credit check loan may seem like the only way to get quick cash if you have a low credit score or no credit history. But this type of loan can come with risks, including triple-digit interest rates and short repayment terms.

Before you borrow, learn why loans without credit checks can be dangerous, how to evaluate this type of loan, and what safer alternatives may be available to you.

Nerdy tip: An installment loan can be a more affordable way to borrow money. These loans allow you to borrow the money all at once and then pay it back in fixed monthly installments over a period of months or years, instead of weeks. You won’t need to provide collateral, and loan amounts tend to be higher, while interest rates are generally lower. Lenders generally require a credit check to apply, but some specifically offer installment loans for bad credit.

What is a no credit check loan?

With a no credit check loan, the lender does not look at your credit history or credit score when deciding whether to give you a loan. Skipping credit checks is common with payday lenders and other companies that offer high interest loans.

Your credit history tells the lender how you’ve managed your debts in the past and helps them determine the likelihood of you paying off a new loan. Not knowing your credit history makes the loan risky for the lender, and many no credit check lenders balance this risk by charging exorbitant fees. annual percentage rates.

These loans are often for a few thousand dollars or less and have short repayment terms of a few weeks or months, which makes them difficult to repay on time and can lead the borrower into a cycle of debt.

Loan alternatives without credit check

But a low credit score doesn’t have to get in the way if you want to borrow from a lender with affordable rates and responsible underwriting practices. Here are other loan options for borrowers with bad credit (FICO score of 629 or lower).

Loans from credit unions

Some credit unions offer small personal loans of $500 or more. To qualify for a loan, they may consider information other than your credit score, such as your membership history. Many credit unions also offer credit cards or start-up loans to help you establish a credit history. The interest rate charged by federal credit unions is capped at 18%.

Alternative payday loans

Known as PAL, these loans issued by credit unions help small borrowers avoid the debt trap created by traditional payday loans. APRs on these loans are capped at 28%.

Buy now, pay later

Buy now, pay later“Companies offer to split a purchase into small payments over a few weeks or months. BNPL companies generally do not make hard credit draw, so approval may be easier than with a traditional loan. BNPL can be useful for urgent expenses, but use it for one purchase at a time to avoid overspending.

cash advance apps

cash advance apps, like Earnin and Dave, allow you to borrow up to a few hundred dollars from your expected earnings; they usually require a refund on your next payday. Although cash advance apps don’t charge interest, they may require a subscription or quick finance fee, or they may ask for an optional tip.

Online lenders

Some online lenders consider borrowers with poor credit, even those with FICO scores below 600. To help you qualify, they consider additional data, such as employment status and outstanding debts. However, loans for bad credit have higher rates.

A lender who says they don’t have a minimum credit score can still review your credit report. Many of the lenders listed below use your credit history to make a loan decision.

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NerdWallet Ranking

NerdWallet ratings are determined by our editorial team. The scoring formula takes into account factors we consider favorable to consumers, including impact on credit score, rates and fees, customer experience and responsible lending practices.

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NerdWallet Ranking

NerdWallet ratings are determined by our editorial team. The scoring formula takes into account factors we consider favorable to consumers, including impact on credit score, rates and fees, customer experience and responsible lending practices.

4.5

NerdWallet Ranking

NerdWallet ratings are determined by our editorial team. The scoring formula takes into account factors we consider favorable to consumers, including impact on credit score, rates and fees, customer experience and responsible lending practices.

4.0

NerdWallet Ranking

NerdWallet ratings are determined by our editorial team. The scoring formula takes into account factors we consider favorable to consumers, including impact on credit score, rates and fees, customer experience and responsible lending practices.

3.0

NerdWallet Ranking

NerdWallet ratings are determined by our editorial team. The scoring formula takes into account factors we consider favorable to consumers, including impact on credit score, rates and fees, customer experience and responsible lending practices.

Example of a loan without a credit check

If you have poor credit and take out a $2,000 one-year loan with an APR of 36% — the highest rate an affordable loan can have, according to most consumer advocates — your monthly payment will be $201. That same loan from a no credit check lender with an APR of 200% would cost you $396 per month, almost double the cost.

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Are there safe no credit check loans?

A no credit check lender who reviews at least some of your financial information is a safer choice than one who lends money no questions asked.

There are online lenders, for example, who examine an applicant’s bank account to assess their spending habits, deposits, and withdrawals. An account that shows multiple overdrafts may disqualify a candidate.

Other lenders review reports from other credit reporting agencies that collect information about consumers with low credit ratings. These reports can indicate, for example, whether you have obtained a payday loan or a title loan.

How to shop for loans without a credit check

If a loan without a credit check is your best option, here are some tips for avoiding a predatory lender.

  • Look for the APR. Lenders are required by law to disclose the APR of the loan. This number helps you gauge the affordability of the loan and compare it with other loans. Make sure you see it before signing a loan agreement.

  • Find a lender who assesses your ability to repay. Reviewing your bank account information, checking other credit reporting agencies, and requiring proof of income are all signs that a lender wants you to repay the loan. A lender who does not verify your ability to repay may expect you to have to borrow again to repay the first loan, which is how a cycle of debt begins.

  • Understand repayment terms. Whether you agree to pay the money back in two weeks or a few months, know your payment date and how the lender will receive the money. If the lender debits your bank account, review your budget to make sure the money will be there and you won’t have an overdraft.

  • Ask if the loan is fully amortized. If the loan requires multiple payments, ask to see the amortization schedule, which is a chart showing how much of each payment goes to principal and how much interest. If the loan does not fully amortize, some of your payments may be applied to interest only without reducing the principal you owe.

  • Look for the lender’s license. The Federal Trade Commission requires lenders to register in all states where they do business. Many list their licenses on their websites.

  • Beware of scammers. A reputable lender will not ask you to pay them before getting a loan. If the lender asks for a gift card or money before lending money, they are probably a scammer.