People with bad credit often get drawn to ads of no credit check loans. This seems the best solution since the bad credit score will not stand between client and personal loan. However, the reality is different from what some lenders state in their ads. All authorized lenders run checks of various types. Depending on the lending company and type of loan a soft or hard credit pull is performed. Borrowers should avoid lenders who don’t perform any checks at all!
What is credit check?
A credit check is an inquiry of somebody’s credit report, showing the detailed credit history. Three major credit bureaus – Experian, TransUnion, and Equifax are responsible for collecting and creating credit reports. Credit report refers to habits of paying the bills, Taken loans, employment data, bank accounts Whether are in good standing or past due, credit limits, high balances, and bankruptcy.
Hard credit check
A traditional credit inquiry is the kind of checkup consumers would want to avoid if dealing with bad credit. Every time somebody applies for large personal loan credit history will be checked-up in this manner. Hard checks show in the borrowers’ credit reports. The complete copy of credit history is studied thoroughly, and this might decrease the credit score by as much as five points! However, a hard credit pull must be authorized by the respective institutions, so not every lender can do it for no reason at all.
FICO experts warn about having too many credit inquiries records in a report. Considered that a person with six hard marks or more performed during one year is more likely to become bankrupt than a no credit check one. On the other hand, lenders may reject to offer loans for people with several hard checks in their reports because of the facts mentioned above.
Soft credit pull
Legit lenders mean that they offer loans no credit check by running a soft or alternative credit check. They conduct such actions on the clients’ credit just to get an idea of their financial situation. Opposite to hard pulls, soft ones don’t need authorization, don’t show in credit report and don’t affect credit rating. Legit lenders for quick cash loans like payday loans or installment loans perform them.
What are no credit check loans?
The no credit check loans are payday loans – short-term cash advance provided to almost everybody with good or bad credit. Payday lenders that offer quick loans without credit check will not conduct any detailed inquiry into a borrower’s financial background. The pity fact is that most payday borrowers have bad or no credit. They rarely afford to pay back loans within the established time frames and use loans renewals. The business of payday loans wouldn’t work for this kind of borrowers in another way.
What are the requirements for alternative check cash loans?
Lenders provide consumers unsecured quick loans if they meet eligibility criteria:
- – Age over 18;
- – A constant income.
Lenders who promise loans with no checks don’t care about their customers, as they want them to fail on paying back on time and roll over the loans. This is part of predatory lending to scam clients. Rolling over the loan involves extending its due date for extra high fees and interest. But it isn’t a bad thing when it occurs naturally.
Why do lenders perform soft credit pulls?
- For getting a general idea of financial status of applicant;
- To see if a borrower can repay the requested amount of money;
- To make an offer that suits the applicant’s situation.
Another significant difference between no credit check lenders and soft pull ones is that the latter offer installment loans in the long term, besides payday loans. Installment loans are more convenient than quick cash loans because borrowers repay them in periodical payments and have an APR that is lower than the one of payday loans.
What can borrowers do?
THE Bear is an online loans matching service. We suggest going with our lenders which care about customers! Our lenders don’t trap consumers in endless debt cycles and perform a credit inquiry prior to forwarding an offer to their client. Applying for quick payday loans or installment loans with us won’t harm credit score. Borrowers get the chance to improve it by responsibly paying the loan back. Don’t fall into the no credit check loan trap and use THE Bear.