The financial reality for many people these days is that they have low income, no savings, and weak or no credit. When an emergency happens—like a car repair or an unexpected medical situation—options can be hard to come by. In these cases, a loan may be very necessary. But which loan? And how do you apply for one without harming your credit even more?
The world of No Credit Check Loans
If you have weak credit (typically a FICO score of 620 or below), it can be difficult for you to get a loan from a bank or even from most online lenders. A no-credit-check loan from a direct lender can then be very attractive.
But you need to take several things into account before making that final decision. Spend a little time doing research, and you’ll be much better off in the long run. Avoid predatory loans from payday and title lenders at all costs. If you don’t, you may go from “no credit” to “no paycheck” or, even worse, “no car.”
Why does checking credit matter?
It’s important for borrowers to understand credit checks because, generally, each time a lender or financial institution checks your credit, your score is actually lowered. It doesn’t seem fair, does it? You need to borrow money, but to borrow money, a lender checks your credit—which can ding your credit score, making it harder to borrow. What’s up with that?
Many traditional lenders and financial institutions perform what’s called a “hard credit inquiry”—or hard credit check—when they review your credit. This means they’re judging your credit score, credit report and credit history to determine how risky it will be to lend you money. So why does a hard credit check hurt your credit?
A number of hard credit checks in a short amount of time is often interpreted as a sign that you’re desperate for money—it may look like you’re either mismanaging the money you have or simply trying to accrue more debt without paying off the money you currently owe. It makes you look risky—and your credit score is then lowered to reflect that risk.
If you need fast cash, then you’re likely only concerned about getting the money you need now and not letting a bunch of hard credit checks further lower your score. In these cases, a no credit check loan may seem like just what you need. But be careful!
How do No Credit Check Loans work?
If a lender is offering you a loan without looking into your credit at all, they’re probably a predatory payday or title lender. Predatory lenders offer loans at astronomically high annual percentage rates (350 percent and above) and for very short terms (usually 2 to 4 weeks). This toxic combination of high rates and short terms amounts to a loan that can be impossible to repay. Why would someone loan you money that you can’t repay? Good question. Loans like these are designed to trap borrowers into a cycle of debt through an action called rollover (a persistent pattern of “extending” the loan while incurring new fees and interest charges). This means you keep paying and paying… and paying… and paying, but you’re just paying the interest on the loan—not on the principal of the loan itself.
How do loans through OppLoans work?
At OppLoans, we provide access to loans that take into account a number of factors outside of your credit score. These include proof of regular employment for at least the past two months, and a traditional bank account in your name with at least 90 days of history. This—along with utilizing alternative credit data—all adds up to a picture of your ability to repay your loan.
Loans through OppLoans utilize alternative credit data in looking at your abilty to repay—which you may also hear referred to as a “soft credit check.” Credit inquiries using alternative credit data only return a high-level description of your creditworthiness—and most importantly they do not affect an individual’s traditional credit score.
Why Loans through OppLoans are different
If you’re worried about your traditional credit score and you need money now, there are basic actions you can take to protect yourself and improve your financial reality.
Remember to avoid the debt trap of predatory lenders like payday and title lenders. They target the financially vulnerable and can take your situation from bad to disastrous.
Secondly, if you already know your traditional credit score isn’t ideal, you might want to avoid the typical hard credit inquiries performed by many traditional lenders. Your credit score can be further negatively impacted making it more difficult to secure credit and loans in the future.
Instead, seek a personal installment loan from a lender that offers loans that utilize alternative credit data that won’t affect your score when determining your creditworthiness. The installment loans offered by OppLoans are cheaper, safer, and more responsible than the predatory payday and title loan alternatives.
OppLoans is here for you. If you need financial assistance in the form of a safe and secure personal loan, apply today for a personal loan that can help improve your credit!