No-credit-check loans: What to know and alternatives

Applying for a personal loan typically involves a hard credit inquiry that allows the lender to check your credit report and score, which it uses to gauge your eligibility. But true to their name, most no-credit-check lenders don't run your credit when determining eligibility for loans. No-credit-check personal loans, however, may run a soft credit pull which won't impact your score.

While a no-credit-check loan may be tempting, many should be steered clear of. Costs can be very high - Pew research found that the average annual percentage rate (APR) on payday loans can be over 600% in some states. And repayment terms run short - they're often capped at two weeks, after which you'll owe additional fees if you can't repay.

Read on to learn about types of no-credit-check loans that are a better choice, where to get them, and alternatives.

Where to get a no-credit-check personal loan

Several lenders offer no-credit-check loans or loans that only run a soft credit check, though many carry triple-digit APRs. For comparison, personal loan rates from traditional lenders tend to top out at 36%.

If you need to consider a no- or soft-credit-check loan, consider the legitimate loan companies below before resorting to a traditional payday loan or title loan.

OppLoans

Best for: Borrowers with no credit or bad credit

OppLoans offers installment loans with months-long repayment terms specifically for bad credit. Though they may consider your credit via a soft credit pull, they won't conduct a hard pull which can ding your score.

Possible Finance

Best for: Borrowers in need of a small short-term loan, looking to build credit

Possible Finance might be a better version of the traditional payday loan. Though loan amounts top out at $500, you have up to eight weeks to repay, and the company promises not to charge late or penalty fees, ever. Plus, it reports your payments to TransUnion and Experian - so on-time payment can help you build credit.

NetCredit

Best for: Debt consolidation and a long repayment period

You'll need to have an income of at least $18,000 annually to qualify, but there is no credit score minimum (the lender runs a soft credit check). Plus, NetCredit has one of the longest repayment terms available, up to five years. But this loan is primarily for debt consolidation.

60 Month Loans

Best for: Borrowers with fair credit

You'll need a FICO credit score of at least 580 to qualify which is right on the cusp of fair credit. (A bad credit score is one below 580; fair credit lives between 580 and 669.) But 60 Month Loans offers some of the best rates and repayment terms we've seen of lenders that don't conduct a hard credit pull.

Methodology

We evaluated no-credit-check loans based on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms, fees, discounts, and whether cosigners are accepted. Our team of experts gathered information from each lender's website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date.

Read our full lender rating methodology for more information.

What is a no-credit-check loan?

As its name implies, no-credit-check loans are a type of personal loan where the lender doesn't perform a credit check. Instead, lenders consider other factors, like your income and debt, to determine your eligibility and the rate you'll receive.

Some of the most common no-credit-check personal loans are payday loans, payday alternative loans, title loans, and cash advance apps. These loans provide options to those with poor or no credit, and you can use the funds for nearly any purpose.

But because these loans tend to have higher interest rates and fees than traditional ones, they may not be your best option. If you have bad credit or high debt balances, consider improving your credit through a secured loan, credit counseling, or a debt management plan before applying for a true no-credit-check loan.

Soft-credit check loans

Many lenders catering to borrowers with bad credit run a soft credit check, which means they may consider your credit when setting your rate, but often don't have a minimum credit score requirement. Plus, a soft credit check doesn't bring down your score, like a hard pull can.

Personal loans for bad credit

Prequalify for a personal loan before getting a no-credit-check loan. Some lenders offer loans for bad credit, which means you could pay much less to borrow money (or be able to borrow more) than you would with a no-credit-check loan. These loans tend to offer longer repayment terms - up to seven years, in some cases - and higher loan amounts. Plus, APRs are generally capped around 36%, which is much lower than most no-credit-check loans.

Compare bad-credit personal loan rates

How do no-credit-check loans work?

No-check-credit loans include many different loan types. For instance, payday loans, car title loans, cash app advances, bad credit installment loans, and payday alternative loans all fit the bill, more or less. Though some of these lenders will run a soft credit check, which won't hurt your score.

Term lengths and loan amounts

Most, such as payday loans, cash apps, and title loans, are short term - as in due within a few weeks after you take out the loan. These typically offer small loan amounts as well (less than $1,000). Those that run a soft credit check tend to offer longer repayment terms (up to five years) and larger loan amounts (up to $10,000).

Application

To apply, you must typically submit some personal information, such as proof of income and bank account details, and some lenders may run a soft-credit check which won't impact your score. If you're using an asset, like your car, to secure the loan, you'll need to procure the title as well.

Time to fund

The money is typically available within minutes - either as cash in hand, in your bank account, or via prepaid debit card or check. Though some lenders offering larger loan amounts or longer terms may take longer to send money.

Repayment

If you're approved, the lender will offer you a loan, and you'll repay it according to schedule. In some cases, you'll repay the loan in installments over a set term, while in others, you'll repay it in one lump sum due, typically, by your next paycheck.

Types of no-credit-check loans

Installment loans for bad credit

What to know: Best if you need a long repayment term, a loan larger than $1,000, or want to pay off debt

These types of loans typically require a soft credit check, but may not have a credit score minimum. Funding won't always be as quick as other no-credit-check loans, but terms are often much more reasonable and the lenders may report your payments to credit bureaus.

Repayment periods can be years-long and amounts may be available up to $10,000, depending on your income and other factors.

Payday alternative loans

What to know: Available from federal credit unions, rates on these loans are capped at 28%

Payday alternative loans, or PALs, are offered by certain federal credit unions as an alternative to expensive payday loans. The National Credit Union Administration (NCUA) caps the interest rate for PALs at 28%, making them one of the lowest-rate options for borrowers with bad credit. PALs offer loan amounts up to $2,000 and repayment terms ranging from one month to one year. Loan limits and repayment terms may depend on how long you've been a credit union member. Certain PALs are available to new members while others may only be available if you've been a credit union member for at least 30 days.

Cash advance apps

What to know: Cash apps offer small loan amounts that may be fee-free if you can wait a few days for the money.

Typical advance amounts fall between $25 and $750 per pay period and are due by your next paycheck. Many cash apps don't charge a fee for standard delivery of funds. But if you want expedited delivery - available within minutes or hours - you could pay steeply for it. For instance, a $7 fee to expedite delivery on a $100 advance due in two weeks equates to a 183% APR. Note that costs may be higher to advance money to an external account. Additionally, some cash app providers charge a monthly subscription fee which may augment or replace other fees in the app.

Payday loans

What to know: High fees and short repayment terms make these a poor lending option

Payday loans are a type of short-term loan you can obtain online or at a payday loan store. Generally, loan amounts are limited to $500 or less, and you must repay them in full on your next payday.

Title loans

What to know: Similar to payday loans, title loans often come with exorbitant fees - and could cost you your car

A title loan is a secured loan that uses your vehicle's equity and title as collateral. Like other no-credit-check options, title loans have high interest rates and short repayment terms. With title loans, your lender places a lien on your vehicle, meaning the lender can repossess your vehicle if you fail to repay the loan.

How to get a no-credit-check loan

The process to obtain a no-credit-check loan can vary by lender, but it's generally straightforward. 1. Gather documents: Be prepared to submit documents to support your application, such as:

• Valid government-issued identification
• Proof of income, such as W-2
• Your employer's contact information
• Bank account statements and routing information to fund your loan

2. Fill out the application: Many lenders let you apply online, which is the easiest and fastest method. Or, if you prefer personal service, you can apply in person at a local brick-and-mortar office.

3. Review loan terms and make a decision: After reviewing your application, the lender may extend a loan offer. Remember, lenders that offer personal loans without a credit check usually offset their risk by charging high interest rates and fees, so you'll want to carefully review the costs and repayment terms before accepting a loan.

4. Sign the loan agreement: You're legally entitled to review the interest rates and fees attached to your loan before you sign the loan agreement. If you agree, you'll need to sign the closing documents, then you can expect to receive the funds typically within a week or as soon as one business day.

Pros and cons of no-credit-check loans

Getting a no-credit-check personal loan may be tempting, especially if bad or limited credit prevents you from being approved for credit cards and other loans. However, you may have better options than these types of loans. Before applying, carefully consider the pros and cons to help determine if this type of loan makes sense.

Pros

• No credit check: As its name suggests, the most significant advantage of no-credit-check loans is that lenders use factors other than your credit to determine your loan eligibility
• Fast funding: In many cases, it's possible to get approved for a loan and receive the funds within one business day or even on the same day.

Cons

• Potential for very high costs: Many no-credit-check loans come with high interest rates or fees or include complex terms that make it challenging to repay your loan.
• Potential for debt trap: Some no-credit-check loans can lead to a cycle of high-cost debt. High fees coupled with short repayment terms results in many borrowers requiring another loan to repay the debt or extending the repayment term of the original loan, leading to additional charges.

No-credit-check loan alternatives

If your credit is making it hard to get approved for a personal loan, no-credit loans aren't your only option. Consider these alternatives to help you get access to the money you need:

• Borrow from family or friends: Asking a trusted friend or family member for money may be your best financial option. Experts advise drawing up an agreement that outlines expectations, including a payment schedule, to avoid putting undue stress on your relationship.
• Enlist a cosigner: Adding a cosigner who has a solid credit history to your loan application can improve your chances of approval and get you more favorable terms. Keep in mind, however, your cosigner must agree to assume the responsibility of repaying the loan if you're unable to make payments.
• Consider a credit-builder loan: If you don't need money right away, you could take out a loan to rebuild your credit. By making payments on time each month, credit-builder loans help you build a positive payment history, the most significant factor of your credit score. Once the loan is paid, you receive the money.
• Apply for a secured personal loan: If you're having a hard time qualifying for an unsecured loan, consider applying for a secured one. Since the lender faces less risk, you may qualify for the loan and receive a lower interest rate. The biggest drawback to secured personal loans is that you can lose your collateral if you fail to make loan payments.