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Almost any US resident can qualify for an emergency loan when they have a fair credit score. At the same time, getting a loan with no credit is quite challenging. Nonetheless, it’s not impossible to get approval from certain lenders, even when you have no credit history.
What exactly do we mean when saying “no credit score”? Well, simply put, that means credit reporting bureaus don’t hold any records regarding your credit history. That may be because you never had a credit account, you have recently moved to the US, and foreign credit scores don’t count. On top of that, if you don’t use your credit account for more than two years, credit bureaus cannot determine your score.
What Types of Loans Can You Get with no Credit?
There are three main types of loans that can help you pay for the daily expenses, help you get a car with bad credit, or finance urgent expenses.
Payday loans
Payday cash advances are legal in most states. Consumers now have the option to apply either online or in person. Depending on your exact location, you may get a quick cash loan of up to $1,000 or more. Regulations vary by state and lender. Many consumers claim they have found the best no hard credit check loans via payday lenders.
Representative example: https://badcreditcashasap.com/
Online loans
As their name suggests, online loans are available online, usually through an app. These lenders typically specialize in one type of loan. Typically, borrowers access personal loans through these services. The number of personal loans online has allegedly increased by 11% in only one year due to the accessibility these loan products offer. Their greatest asset is the online instant approval that eligible candidates may receive.
Representative example: https://www.payactiv.com/
Title loans
A title loan uses the title of your vehicle as an asset or collateral for a loan. That way, if you cannot repay your lender, they take your car, boat, motorcycle, etc. Since the title acts as collateral, banks and credit unions are more open to offering you a loan. Like a payday cash advance, a title loan is provided for a short timeframe, up to 30 days. A car title loan lets you use your car and the money, a unique advantage for these financial products.
Representative example: https://centuryfirstfcu.com/aut://co-loans
The Risks of No Credit Loans
If you think no credit loans are convenient, easy to get, and pay off, you’re wrong. They all have their advantages and drawbacks. One obvious issue is the high-interest rates. The APR on some loans may be three digits. Moreover, the short repayment terms can be both a blessing and a curse. Ideally, you would repay your loan on the due date and avoid extra penalties and issues. But then again, nobody is protected against unpredicted payments and financial challenges. If you happen to run into another emergency, you risk stepping into serious debt.
The lenders who thoroughly check your credit score will offer you safer loan options. Since they take more time to analyze your financial background, they will only accept your request based on your past and current financial situation. In contrast, lenders offering no credit check loans, for instance, cannot be sure you will repay them based on your past behavior. Thus, they take additional risks by lending to individuals with no credit. As a consequence, their rates are higher.
How to Find a Legitimate No Credit Check Loan
Although state authorities all across the US take massive action to fight against predatory lending, there are still cases of fraud. Be wary about the lenders that promise you terms sounding too good to be true. See below a short list of red flags that you need to pay attention to for your safety.
- No physical address or landline. A legitimate, licensed lending business will always have a physical address that you can verify. A PO box doesn’t count as proof of location. If both elements are lacking, the chances are that you are dealing with scammers.
- Unsolicited loan offers. If a company contacts you directly with a loan offer when you haven’t made a request, it’s likely a trap.
- Asking you to pay anything upfront. As a borrower, you shouldn’t pay any upfront fees. Guaranteeing same-day deposits. As much as lenders want to help you, they cannot fully control when you get your money.
- Pressuring you into signing the contract. All scammers will rush you into making a quick decision. Legitimate lenders will insist on you carefully reading your agreement before signing it.
Borrow safely and keep an eye on your credit score. Paying your bills and loans on time will help you build credit. On top of that, you are entitled to get a free credit report once a year.
