For some people, the services that don’t require a credit check, like no credit check loans, are the best things that happened to them. Sometimes, having access to a banking service without presenting your credit score can be the only thing you have left, and you might as well use it.
However, how does someone apply for no credit check loans? What do you need to be eligible? Are these loans worth your time? Are they risky in the long run? Let’s find out!
What Are Credit Check Loans?
The loans you get from usual lenders (like banks) require all sorts of documents to prove that you are eligible. Not only that, but a couple of those records will determine whether you are a risk to the lender or not. Of course, we are talking about the document that proves your monthly income and your credit file.
The paper presenting your monthly income is straightforward. Based on how much you earn each month and how much you owe to the bank through bills, taxes and other loans, the lender will decide if the loan is right for you. If it’s too much, he/she will either refuse your request or give you a smaller loan.
If you think that this is not the ideal thing for a lender to do, then think again. Many people opt for a big loan without thinking if they can pay it back or not. The loan itself may not be the problem, but the loan term combined with the high interest rate and other fees might drain you out of your money.
The credit file, on the other hand, will present the lender your past and present loans, debts, your credit score and many others. Most Aussies prefer using no credit check loans because they have bad credit. The reason behind this rating is that they are late with payments, they defaulted on a loan and so on.
Besides the credit score, the credit file also presents any bankruptcies you have, defaults, debt agreements, court judgments, personal insolvency agreements and even credit infringements. All of these elements will be on your file for five to seven years, depending on their severity.
Not only that, but they cannot be erased unless they are proven incorrect. The lender will often look at these as well, besides checking your credit score or your monthly income. In the end, you need to be conscious that the lender does everyone a favour by refusing your request to a loan you cannot pay.
Info about No Credit Check Loans
Unlike the loan presented above, this type of loan is appealing for those who have bad credit. No credit check loans can do wonders for those who need the money and are also careful when paying it back.
For no credit check loans, you must remove the credit file from the documents needed to apply for that loan. All you are left with is a paper that presents your monthly income, personal details and that is all.
But as you can see, the many disadvantages presented above do apply here. When a loan is out of your league, and you know it, the lender knows it as well. You apply for it without presenting any documents, so you are taking a huge risk. Here are some advantages and disadvantages of no credit check loans:
- The Advantages
You can apply for a small to a decent amount. That loan can help you in case of an emergency or in case you need money for a couple of months. Another advantage is that it’s easy to apply for it, and you don’t need a lot of documents like other loans require.
- The Disadvantages
Usually, when a lender offers this kind of service, he/she knows what kind of clients will apply for it. And that is why he/she will charge the customer high fees and high interest rates. That’s how a lender makes a profit from no credit check loans.
Couple this with the monthly loan payments and you may end up regretting requesting this loan.
In the end, it is up to you to decide if this loan is what you need. Yes, it comes with a lot of advantages given your current situation, but the drawbacks can end up ruining your finances. Also, people who use no credit check loans multiple times end up having more financial problems in the long run.
We advise you to try to maintain a positive credit score and apply only for standard loans.
No credit check loans make sense when you are in a tight financial situation. However, if you are not careful, you might get further into debt. If you want to find out more about this topic, enquire with us today.