Personal loans with no credit check?

Personal loans with no credit check, does that exist? We would say no, all personal loans do some kind of credit check. But in our experience, they vary greatly as of who they accept in the end. So even if you have been denied a loan in the past, there might be alternatives. On a side note, there are Payday loans that might from time to time do no credit check on applications.

So instead we should focus on those lenders with high approval rates. And those are:

Payday loans with very low requirements, last option:

Personal Loans and Credit Checks

No matter what type of personal loan you are looking for, you will most likely have to go through some type of credit check. How much weight is given to your credit depends on the lender and the type of loan you are applying for. But how exactly does a credit check work and how does it affect you? Read on to find out.

What Happens During a Credit Check

Lenders use your credit score to determine your creditworthiness and how likely you are to repay a loan on time and in full. They do this by contacting one (or more) of the three credit reporting agencies: Transunion, Experian and Equifax.

Not only will they receive your credit score, they will also be able to view your payment history, length of credit and more. Depending on the type of loan application you have submitted, the lender will pull one of three types of reports:

  • Hard inquiry
  • Soft inquiry
  • Marketing inquiry

Each type of inquiry accesses slightly different information and can actually affect your credit score in different ways.

How Credit Checks Affect You

A hard inquiry is the most common type of credit check performed by financial institutions like banks or credit unions. It includes a full check of your credit report. Because this type of check shows you are serious about getting a loan, it can temporarily decrease your credit score. If you have too many hard inquiries in a short amount of time, it can raise a flag to lenders that you are hard pressed for cash and may be a liability.

Soft inquiries, on the other hand, show up on your credit report but don’t directly affect your credit score. Most online lenders use this type of credit check for pre-approval so you can review multiple interest rate offers before completing a full application.

Finally, a marketing inquiry is used for promotional offers for credit cards and other financial products. They do not show up on your credit report.

Before applying for any personal loan, make sure you understand the credit check process to ensure you don’t inadvertently lower your score. Try starting off with a pre-approval that uses a soft inquiry, or try a matching service that will provide you with several loan offers with just one application.

How to Improve Your Credit Score

The best thing you can do to improve your credit score is to make sure you pay all of your monthly bills and debts on time. Payment history accounts for 35% of your score – the largest category. Also avoid hard inquiries on your credit report. Many online personal lenders offer soft pulls for preapproval so always be sure to double check there won’t be a hard inquiry performed before you request a loan offer or credit card.

Instead of cancelling unused credit cards, consider keeping them active and paying down the balances on other cards. This will help your debt utilization ratio – having access to credit is a good thing, you just don’t want to look like you’ve maxed out all your options. Finally, be patient when trying to improve your credit score. Delinquencies stay on your report for seven years, while bankruptcies and tax liens stay on for seven to ten years. There’s simply nothing you can do but wait.

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