Payday Loans No Credit Checks [Сomplete Guide]
Table of Contents
- What is a No Credit Check Payday Loan?
- What is Credit History?
- What is Credit Check?
- Why Credit Scores Are Important?
- Soft and Hard Credit Checks Explained
- The Impact of Credit Checks on Credit History
- Criticism of Credit Check System
- Is a Payday Loan with no Credit Check a Good Solution?
- How Much Can Person Get Applying for No Credit Payday Loan?
- What is Rollover?
- What are the Requirements?
People with bad credit history may feel at a loss in tough life circumstances. Previously they would apply to the bank for funds to overcome financial difficulties. With bad credit this possibility is not available.
In order to get a payday loan online, you need to contact a lender, who lends you the money. The lender usually gives the loan after a background check, which is a detailed review of your previous credit history.
It is done to judge how risky lending money to you would be. And to assess what interest rate you should pay once they lend you the money. Which is why they can either perform a soft or hard credit check. While the soft credit check is less intensive and barely noticeable by other companies, the hard credit is more detailed and stay in your file for at least 12 months.
What is a No Credit Check Payday Loan?
Personal loans that do not require a hard credit checks are no credit check pay loans. Before lending a no credit check payday loan, the lender looks at your basic information such as address details, working mobile number, your bank account and current salary.
The no credit check payday loans are comparatively short-term and have to repaid quickly within a week or two, going on to a month or even more than that for the installment loans.
A no credit check loan is highly attractive to the people who have emergency expenses that need to be paid as soon as possible and they do not want their credit score to be affected by this in any way.
Why these loans are possible?
Payday loan companies are often considered as the last resort to get a payday loan without credit check due to their extremely high APR values but they are still considered to be a credible option.
Such loans became a good alternative for categories of population facing a cash crunch and devoid of banks’ money support.
Only 250 thousand people used the service in 2006.
In 2012 the figure increased many times.
The total worth of the industry surpassed $2.6 billion then and continued to increase.
At present, 12 million USA citizens apply to such loans each year. They use online sites and storefront offices to get one time ‘quick fix’ consumer loans.
It’s important to cover the main aspects to understand who belongs to the targeted group of customers.
What figures determine the person’s credit history?
What credit score should one have to be creditworthy?
How credit check is done?
Why do people prefer to select no credit check loans? The article below will cover these issues.
What is Credit History?
The credit history presents the track record of the borrower’s payments. It shows the way the borrower repaid his previous debts. Delays in payments or inability to repay the debt affect the person’s credit score badly. It’s considered that it reflects the person’s attitude to financial issues and responsibility of the borrower. The most widely used credit score systems are FICO and VantageScore that employ their own systems of assessment.
Both of them are used to figure out if the client is credit-worthy. For instance, a FICO scale ranges from 300 to 850. The lending institutions base upon it when they decide upon the approval and rate. The clients with good reputation are those who have a score over 650. Such people can qualify for lower rates when they apply to the bank.
Here is the chart showing FICO and VantageScore scores are assessed:
What is Credit Check?
A credit check is a search for information from your credit report. The lending companies are interested in financial behavior of the potential client. They want to figure out how the applicant manages the finances to decide if the person is worth to be trusted.
Why Credit Scores Are Important?
Soft and Hard Credit Checks Explained
Applying for no credit check loan, the person authorizes the lender to request the copy of credit report. Each time the lender makes such request, it’s reflected in the credit report in the section inquiries. It includes all requests done within the last 2 years. All requests are divided into ‘hard’ and ‘soft’.
- A ‘soft’ inquiry is created when the lending institution orders your report. It is usually done with a goal to send the preapproved credit to the client. The client is able to see these inquiries. They do not affect the credit report in some way.
- When the person asks for a credit, the hard request is created. The lender is able to see hard requests. In case there are many of them, it looks very suspicious. It warns the lender of the potential risk. So the person can easily become not creditworthy just because he applied for the loan several times within the short period of time.
The Impact of Credit Checks on Credit History
The degree of impact of credit checks on credit score differs from one client to another because each credit history is unique. Though the impact can be small, sometimes it becomes crucial.
For instance, when the score is insufficient and the person lacks several points to become creditworthy. As a result of that the person is rejected (check our recommendations). Therefore, it’s recommended to view own credit score information before applying for loan. You’ll know what to expect then to handle the situation.
Criticism of Credit Check System
The credit scoring system is criticized much. It’s not fair that people are sometimes considered bad credit customers just because they tried to avoid borrowing. Actually, 14% of US citizens don’t have credit score. These individuals are called credit invisible. Such consumers face the problems when trying to obtain a credit line.
It’s also unfair that a single missed payment can ruin the reputation. Especially, when it’s not the borrower’s fault. As a result, the person finds himself locked out of the financial system. Almost quarter of Americans had credit score below 600 during recession.
Is a Payday Loan with no Credit Check a Good Solution?
Payday lenders filled the niche left by banks and succeeded in the sphere. Payday lending companies offer a line of credit on different terms. This type of loan doesn’t require credit check. Any person regardless of age, status and credit score can apply for payday loan. Such financial products may seem costly, but approval is guaranteed.
This solution can be a good opportunity for people with ruined credit history or without it. For many this is the only way out in tough financial circumstances. So this solution is worth paying attention to.
How Much Can Person Get Applying for No Credit Check Payday Loan?
When the customer applies for no credit check payday loan, he is able to get the amount up to $1500.
Usually these are amounts from $300 to $500. This type of loan was created to help people to make it up until the next salary. Therefore its duration doesn’t last longer than a month. The person should reimburse the borrowed amount plus the fee charged as soon as he gets the next paycheck.
The interest rate is much higher for customers who borrow payday loans. It can reach $25 per $100. The cash is transferred automatically after the approved client accepts the terms. The amount of debt along with fee is also deducted automatically on a due date.
What is Rollover?
When the person can’t repay his debt in time, it’s possible to postpone the due date. Such procedure is called roll over. However, the client has to compensate the delay paying additional fee. The lenders try to move away from this practice to avoid debt accumulation. In the worst scenario, a loan can turn into unmanageable cycle of loans. It’s better to avoid the extension of loan and stay on track with payments. Rollovers are not allowed in some US states. It’s prohibited in Arizona, Arkansas, Connecticut, Georgia, Maine, Maryland, etc.
What are the Requirements?
The lending companies delivering payday loan don’t check credit score. The lenders ask to comply with their requirements. The list includes age, citizenship and minimal level of income. The lenders also ask for checking account data to conclude the agreement.
It’s important for the applicants to have a regular source of income to comply. Most lenders request that the applicant should get at least $1000 per month. It helps lenders to protect themselves, but it protects the borrowers as well. Employed people are able to repay the debt without problems. We shouldn’t forget about the goal of payday loan. We need it to deal with unexpected expenses. Don’t cover recurring expenses such as utilities, rent with it.