Can you get a personal loan with no credit check?

July 23, 2019 0 Comment

If you don’t have any credit history or poor scores, you probably assume that obtaining a personal loan is not an option for you. Though most personal loans go hand in hand with credit checks, it is possible to get one even without credit checks. Obtaining one is not easy, so you have to be prepared thoroughly.

The problem with personal loans, no credit checks is that they come with strict terms and high-interest rates. If you are eligible for a traditional loan, it is not advisable for you to apply for this type of loan. For you to obtain a personal loan without a credit check, you need to start by looking at your credit score. This does not hurt your report but instead gives you an idea of the type of loan that you can qualify for.

People who have no credit scores are known to have a thin credit file. Such persons have a problem trying to obtain new credit since lenders cannot assess their risk. Knowing what is stated in your credit report helps you figure out your position as you talk to a personal loan lender. You may realize that your score can make you qualify for a conventional personal loan. Since this comes with better interest rates, you can save some funds in the long term.

Personal loan lenders make use of the FICO score to assess the creditworthiness of borrowers. As long as you have a credit score of more than 300, you can qualify for a loan. If your numbers are below that, you can still get a personal loan without a credit check by approaching a lender directly. The lender can use other financial indicators to determine your ability to repay the loan. For instance, they can use your income statement to assess your creditworthiness.

Many lenders nowadays use data that is not available on the credit report to assess risk. This allows people with poor scores to still qualify for a personal loan. When you choose a lender that looks at alternative data, you raise your chances of qualifying for the personal loan. You can also get better terms for the loan.

The lender, in this case, can focus on data such as your employment, bank account, debt-to-income ratio, income, and a history of payments. Go through personal loan ads for you to identify lenders that use alternative data. You should also be prepared to prove to the lender that you are creditworthy. Ensure you have all the necessary documents to support this. Being prepared also increases your chance of obtaining the loan. Some of the relevant documents include your employment history, tax returns, education records, bank statements, and borrowing history.

If for instance, you have been paying your home mortgage consistently, present documents that can support this claim. The better the evidence, the more creditworthy you look. Since you can obtain such a personal loan from different sources, comparing the available options can help you get favorable terms. When you get the loan, start working on boosting your credit score for future borrowing.