There is no question that low credit ratings make it impossible for you to obtain loans, however, there are financial institutions and lending companies that provide No Credit Check Loans in your times of need and these can be obtained without the lender having to undertake a comprehensive and detailed review of your credit scores and history.
It is understood that regular loan lenders run a detailed credit history examination and a background check to determine if you are in a condition to repay the borrowed amount. No credit check loan companies thoroughly assess your potential to repay the borrowed amount, without performing a credit check.
When you compare the regular rates of interest on standard loans with the no credit check loans, you can see that interest rates on no credit check loans are significantly higher.
You can also make use of a loan calculator to calculate the amount you owe to the lender including interest, these loan calculators give you precise numbers when you fill in the details required.
Availing Loans With Poor Credit Scores
In plain and simple words, a no credit check loan helps in making sure that you have access to “emergency funds” during times of financial need. Typically, a no credit check loan company will not check your credit history and scores instead they will evaluate your ability to pay back the borrowed sum, they will check if you have a stable enough job to help you pay back the borrowed sum.
The key difference between a standard loan and a bad credit loan is the rate of interest that is levied on the loan amount. If you fail to pay on time, the rate of interest will increase or you may be charged with huge penalties.
But there is one question that lingers on the minds of people when they think of obtaining a no credit check loan “will it affect your existing credit scores if it is already low?”.
But the truth is if you make your payments on time it will help you in improving your credit score.
If you pay back the borrowed loan amount on time it will also help your loan lenders in the future trust you, they will not consider you as a financial risk.
Features Of No Credit Check Loans
- They are convenient to apply and the results are instantaneous in most situations, and the process is often an easy one with less barriers to conquer.
- This type of credit check is useful for both lenders and borrowers as it allows the lending institution to determine the willingness of the applicant to repay and besides that it does not affect the credit rating, if the applicant pays back the borrowed sum on time the credit scores improve.
- Since the lending institutions loan a limited amount of cash, short-term loans are only loaned for a small time frame because it lowers the burden they face.
- High interest rates are deemed a disadvantage because small loans have a significantly higher interest rate as opposed to the regular interest rate.
- You have the choice of deciding the length of your repayment period and the limit is extended to a year, but if the lending institution believes you are unlikely to repay the money, you will not necessarily pick the sum, the lender will only give you what you are capable of paying back.
Credit Builder Loans
A credit builder loan is a type of loan that you can obtain when you have low credit scores and history, but there’s a catch, the amount loaned to you by the lender will come into your possession, instead it will be transferred to a bank account held by the lender.
The main reason for this is that credit builder loans are mainly used to improve and build credit scores. You will be given the loan amount when you’ve paid the loan amount back with interest, but there are quite a few lending institutions who will give you a partial refund on the interest charged. Credit builder loans are also referred to as “Fresh Start Loans” and “Starting Over Loans”.
Also remember that you cannot just avail a credit builder loans and expect your credit scores to improve, you ought to make timely payments, these payments will be reported to the credit agencies and then your credit score improves but on the other hand if you don’t make your payments on time then your credit score will come down. The loan repayment term is usually somewhere between six months to two years.
But remember, when you’re looking for a credit builder loan you should always choose a loan that you can pay back. Do not try and opt for something which may put you in trouble. Make sure you check the interest rate levied on the loan and then go ahead with the best possible option for you.
When you’re paying the loan back make sure you keep checking your credit scores on a regular basis to ensure that they are improving. Keep monitoring your credit scores, there hundreds of websites that will allow you to review your credit ratings for free.
This type of loan will force you to build financial discipline, furthermore, these loans are easy to obtain since they are secured by themselves, meaning you will only get the loan amount when you pay back your loan with the interest rate charged. It will help you increase your credit ratings. When you have good credit scores the chances of obtaining other forms of loan becomes very easy and moreover having good credit scores means that you will be charged a lower rate of interest.
These are the two forms of loans that you can obtain when you have poor credit ratings. With that being said, you should bear in mind that improving credit scores is an essential task that you must perform without fail. In order to do that you need to pay back your loans and credit card bills on time. So make sure you make the best out of these loans to help you improve your credit scores.