What Are No-Credit-Check-Loans?
The usual process of bank loans involves individuals providing their credit history and a list of collateral to financial institutions and being granted a loan on the basis of those records. This loan is then paid off by the borrower at an interest rate.
When it comes to no credit check loans, however, these rules do not apply. As the name suggests, these loans do not require any credit which means that borrowers who apply online for no credit check loans aren’t required to produce a record of their financial history. However, as a consequence of that, the interest rates of such loans are higher than usual loans. This is an ideal choice for individuals with low credit scores in need of some emergency cash.
A popular way to find out one’s credit standing is by using the Fair Isaac Corporation (FICO) range. According to FICO, creditworthiness can be determined by the following scores:
- 800 Or More – Exceptional Credit
- 740-700 – Very Good Credit
- 670-739 – Good Credit
- 580-669 – Fair Credit
- Below 580 – Poor Credit
These scores can be used by lenders to determine the creditworthiness of an individual. People with a credit score of 580 or below may apply online for no credit check loans, and the only documents usually required for these grants are a bank account, proof of income, and a valid ID stating that the borrower is over 18 years of age.
Features Of No Credit Check Loans
- These loans are granted irrespective of an individual’s credit records and therefore is an ideal choice for those with lower credit scores
- These loans usually get approved quickly since the documents required in the process are relatively lesser
- Since no credit check loans are granted without paying attention to one’s credit records, they come with a higher interest rate
- These loans offer flexible tenure periods which allows borrowers to have more time to pay off debts
- These loans can be accessed for higher sums of money
Benefits Of No Credit Check Loans
- Individuals with poor credit scores can access these loans to pay for emergency expenses
- These loans require lesser paperwork as compared to regular loans
- Evidence of collaterals are not necessary
- The interest rates are fixed
- No credit check loans can be convenient since they are provided for higher amounts and with the additional benefit of flexible tenures
- These loans have higher and quicker approval rates
No credit check loans are highly convenient for individuals with no credit history or a low FICO score. However, since some lenders are hesitant about granting loans to those with poor credit records, it may be beneficial to make attempts to raise one’s score to avoid being perceived as a ‘risky borrower’.
Few ways to increase one’s credit standing are by increasing credit limit, reducing credit card statement balance, paying off a large debt, and correcting errors in credit reports. Secured loans—a substitute for no credit check loans can also be utilized by individuals to not just receive a loan, but also build better credit scores.