March Money Madness: Make Sure Your No Credit Loan Is Nothing but Net

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It’s March Madness time, but the real challenge is trying to find a loan when your credit score is having a bad season.
There are a lot of “no credit check” loan options out there, but far too many of them are like taking a shot from half-court: a risky idea with little chance of success.
But there is good news…

Just because your score is down right now doesn’t mean you can’t turn it around over time. But for now, you’re on defense, trying to prevent the other team (let’s call ’em the Loan Sharks) from scoring on you. With our coaching, you’ll be sure to get a no credit check loan that’s nothing but net!

Come up with your gameplan ahead of time!

A good basketball team knows game-planning for their opponent can be the difference between an exhilarating victory and a humiliating defeat. But it can be tough to come up with a plan during an emergency, so you should always have one ahead of time.

Ian Atkins, an analyst and writer for Fit Small Business (@FitSmallBiz), suggests that potential borrowers “shop online for loans that are designed for less than perfect credit but that offer reasonable repayment terms.”

You can do your research to figure out which “no credit check” lenders have reasonable terms you can actually handle. The last thing you want when you end up in a financial emergency is to be stuck with a payday lender.

If payday lenders were a basketball player, they would be the guy who does whatever it takes to steal the ball, even if it means playing dirty. (cough Grayson Allen cough.) Occasionally they even get shut down by the refs.

Atkins also recommends looking into what government assistance you might qualify for: “The thing about recurring household expenses is that they won’t go away. Many people considering a payday or title loan will be in a state, county, or city that offers temporary assistance programs they might benefit from. Whether it’s rental assistance, help with utility bills, or nutritional assistance, you may need to find a non-borrowing solution to your budget for a while.”

Don’t let your loan go into overtime! 

Those payday lenders we mentioned we mentioned earlier? One of the worst things about them is the short payment terms they offer. Many will expect you to pay back the full loan, with interest and fees, in only two weeks.

Imagine getting to the final round of March Madness and being told the game is only going to last ten minutes. That would be madness, no matter the month!

What happens if you can’t pay your loan back in time? Well, you’ll be forced to pay a “rollover” fee to extend your loan. It’s like if you were losing a game and you had to pay for more time using whatever points you already had. Sure, you would get extra time to win the game, but you’d have to score even more points to do so!

Rolling over a payday loan might give you an extra two weeks to pay off your loan, but that added time comes at much too high a cost.

Make sure you’ve got a team to back you up!

You’ve made it all the way to the final game. The other team enters the arena. They’ve got their five players, ready to go, and a bench full of people set to take over as soon as they’re needed.

You look around to see… that you’re all alone.

That’s not going to work at all! Unless your idea of a good game is 48 straight minutes of getting dunked on.

If you don’t have a strong team on your side, you’re doomed to fail. That’s why you don’t want a lender who sees themselves as your opponent.

Instead, find a lender who’s willing to work with you to create a payment plan you’ll be able to pay off in a reasonable timeframe while still having money left for the essentials, like food, rent, and a cable package that allows you to watch the NCAA finals. (Okay, so that last one isn’t actually a necessity.)

In addition to working with you, a good lender will have customer service professionals available to help you whenever you need it—whether you’re worried you might miss a payment or you need to ask about a change in terms.

You deserve to work with a lender who wants to be on your team and see you succeed.

Don’t give up what’s essential!

So the coach tells you he has a brand new strategy to win. Step one: you’ve got to hand over the ball to the other team.

Wait, what?

You don’t have to hear step two to realize this is not a great plan.

That’s why you should avoid title loans, which make you put up your car as collateral. In these loan arrangements, when you fail to pay, you’ll be forced to give up your car. If you like your ride, then a title loan is a predatory loan you need to avoid.

Listen to the fans!

A great team should have frighteningly committed fans. If people are painting their faces and wearing funny hats, there must be a good reason for it.

Likewise, if you showed up to a basketball game and the stadium was empty, it would make you wonder why the home team isn’t earning any fans.

That’s why it’s important to check online lender reviews. When you find a lender that gets people to wear giant foam fingers and paint letters on their chest (figuratively) then you know you have someone you can work with.

You’ll still need to be very careful to find out all the terms and be sure you’re getting a fair loan—but if everyone else has had a good experience, odds are you might too.


Contributor

Ian Atkins (@FitSmallBiz) is an analyst and staff writer for Fit Small Business. He covers small business finance with a focus on traditional and alternative small business lending. Ian has over 9 years working in personal and small business finance.

How to Shop for a No Credit Check Loan

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The lending industry can be confusing and difficult for anyone, but it’s even more painful to navigate if your credit score is low.
There are “no credit check loans” you can find online or from storefronts, but you can practically see some of those predatory lenders salivating at their chance to take advantage of you.
Speaking of salivating, you know what’s simpler than finding a loan? Shopping for food. If only finding a no credit check loan could be as simple as a trip to the grocery store.
Thankfully, there are a lot of similarities. Read on and try not to get too hungry.

Make a List of What you Need

A grocery list allows you to stay focused while shopping, making sure you pick up everything you need and hopefully not buying too many items you don’t.

When you’re looking for the proper “no credit check” loan, it’s also a good idea to have a list of your needs.

You should figure out exactly what you’ll be able to pay, how long you’ll have before you have to pay it back, whether you might have collateral that you’d be willing to put up, and if you have anyone with better credit who might be able to co-sign.

A list is even more important when it comes to loans than when it comes to groceries. The worst thing that might happen if you leave your grocery list at home is your house spends another week banana-less.

The worst thing that’ll happen if you take out a loan you aren’t prepared for is crushing debt and bankruptcy.

Compare Different Brands

When it comes to certain products, you probably have a favorite. You don’t care that “Toasted Wheat Chippers” are cheaper and healthier. You love “Frosty Bran-Os,” and when you choose a cereal, you’re bonded for life.

But when it comes to milk or butter or broccoli? You might as well compare the different options to find out which is the most affordable while still providing everything you need.

For loans, you want to make comparisons too. And just like with food items, it’s important that you’re searching out the most affordable option that will get you what you need.

But here’s where things are a little different. While most items in a grocery store will be clearly labeled for your convenience, a lot of lenders would rather obscure just how much their loan will cost you.

That’s why you should be sure to compare different loans in terms of their APR, or annual percentage rating, which is a number that tells you the total cost of a loan, including fees and interest.

Hopefully, you’ll be able to find a loan that you can afford and still have money left over for those tasty Frosty Bran-Os.

Read Those Labels Closely

One thing lenders and food manufacturers have in common is that they love to hide any negative facts very carefully.

Sure, that tea drink is ORGANIC and ARTISINAL and it has a lovely picture of a sunset on it, but turn the bottle around and you’ll find out that it has approximately 900 grams of sugar (give or take).

Lenders are the same way. They’ll try to tell you the good parts upfront while hiding the bad stuff. They have big flashy signs that tell you NO CREDIT CHECK and INSTANT CASH, but you won’t be seeing SHORT PAYMENT TERMS and HIDDEN FEES shimmering in neon.

That’s why it’s important for you to turn around the (metaphorical) bottle and read the fine print. In this case, that’s asking your lender the right questions and making sure you’ll have a payment plan that you can afford that won’t get you stuck in a cycle of debt.

Get Only What You Need

They say never go to the grocery store hungry, because you don’t want to fill up your cart with more food than you could possibly eat before it expires. If you’re not going to eat it or you won’t have room in the fridge, then you just wasted money you probably can’t afford to waste.

It’s the same idea with no credit check loans. Even the best no credit check loans are going to have higher interest than loans that require good credit to get.

Assuming you aren’t in desperate need of a loan, it’s worth the effort to get your credit score up first. And what’s the best way to do that? According to Miron Lulic (@MironLulic), the founder and CEO of SuperMoney, “There are plenty of strategies anyone with a subprime credit score can take to rapidly increase their score. For example, setting up one or more secured credit cards and using them responsibly is a great way to establish credit.”

Make Sure They’re Making Sure You Can Pay

Imagine that you’ve brought your cart of groceries to the register, and instead of scanning each one, the cashier just tells you to go on and take them. “It’ll all work out,” they say, with a suspicious smirk.

Sure, this seems nice, but you would be correct to wonder just whom “it’ll all work out” for. Unless you won some sort of contest (and then you would have noticed the balloons), they aren’t going to let you just keep those groceries without making sure you can pay for them.

Similarly, it’s suspicious if a no credit check lender seems totally unconcerned about your ability to pay back your loan.

Even without checking your credit score, a lender should require some proof of income or bank information. They could also perform a “soft” credit check, which is a credit check that doesn’t negatively impact your credit score.

If they seem totally unconcerned about your ability to pay back the loan, it probably means they don’t care if you’re able to pay back the loan. And that’s a problem. Because it means they’re likely trying to trap you into paying a rollover fee to extend your loan, which is a surefire way to get stuck in endless debt.

Know Where You’re Shopping

Obviously you can’t go shopping if you don’t know where the supermarket is. It seems almost silly to mention, but yes, you’ll want to find out where it’s located before leaving the home.

Lenders are the same way, but since so many of them allow you to take out a loan through the internet, you could “shop” there without knowing their location. But you shouldn’t!

Sally Elizabeth of PeopleClaim.com (@PeopleClaim) warned us about the danger:

“Check the company’s real location. Companies based overseas or in sovereign Native American territories may not be bound by the same rules as US lenders. One claimant thought she was dealing with a Delaware company, but she wasn’t. She ended up paying 780% interest.”

Elizabeth also points out that finding the location isn’t always easy: “The location of the company may not be obvious; a website might show, for instance, a Delaware address. But drill down into the website’s terms and conditions or privacy policy. If you find an address in the Caymans, the Virgin Islands, or a Native American or First Nations territory, then buyer beware.”

Just be sure to keep all of these things in mind and you’ll have the most delicious… er… painless loan experience possible.


About the Contributors:

Sally Elizabeth, works for online dispute resolution platform PeopleClaim.com, helping people who are normally shut out of the legal system because of time or money. Weeding scams out from common consumer complaints has taught her way more about scammers than she ever wanted to know.

Miron Lulic is Founder and CEO at SuperMoney – a website that helps people compare financial services and get financial advice. Millions of people trust SuperMoney when shopping for loans, investments and other financial services.

Can a No Credit Check Loan Actually Hurt Your Credit?

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Here’s a common financial catch 22. You need a loan but your credit score isn’t looking good. You’re worried that even applying for a loan will trigger a credit check—and don’t those just make your credit score even worse? If only you could get a loan without a credit check: some sort of “no credit check loan.” You decide to type those very words into Google and…

Finally, some good news! “No credit check loans” exist and there are so very many options to choose from.

You decide to go with the first payday lender that pops up and you’re quickly approved. Not only did they not perform a credit check, they didn’t even check for your income. The interest rates are quite high and you’ll have to pay it back in full—with fees—in under two weeks, but you think you’ll have just enough to cover it after your next paycheck.

So, you got your loan without impacting your credit score, right? …Right?


It’s Going To Impact Your Credit Score

Not according to Randall Yates (@the_lenders_net), CEO and founder of The Lenders Network.

“A ‘no credit check’ loan will actually decrease your credit score temporarily the instant you get it. Even though there is no credit inquiry involved, when the new account is reported to the credit bureaus it adds debt to your total liabilities, which is 30% of your credit score,” he told us.

But as Yates says, this is temporary, so if you pay back the loan, “your credit score will go back to where it was.”

But many of these loans are designed to keep you from repaying them. The short payment terms are no mistake. It’s a system designed to trap you.

If (or when) you find yourself unable to pay back the full loan in time, the lender will give you the option to “rollover.” In other words, you can pay a fee to extend your loan. It’s going to make things even more expensive, but what choice do you have?

You roll the loan over a couple times and now you owe even more than you did in the first place. You’re falling further and further into debt, so you just decide to stop paying.

Enter: The Debt Collector

We’ve got some bad news. Per nationally recognized credit expert Jeanne Kelly, (@creditscoop), “If you find yourself in financial hardship and miss many payments, the loan goes into collection and this will drop your score.” One of the first things they’re going to do when they start coming after you is report your nonpayment to the big credit rating agencies.1

Kelly warns, “if a collection agency handles the debt and they report an account on your credit report, it can drop your score approximately 100 points.” After all that heartache, you ended up in the exact place you were worried about.

But at least if you pay back the collections agency, everything goes back to normal, right? Sadly, no. “Unfortunately in most cases, if you pay a collection account, your credit scores don’t immediately improve,” says Gerri Detweiler, (@gerridetweiler), author and debt law expert.

Deweiler recently wrote an article featuring strategies for removing collections claims from your credit report, but she cautions that “for the most part you’re going to live with that damage for years to come.”

A Better Alternative And Some Good Advice

As you can tell, this is a situation you’re better off avoiding entirely, if possible. Even if you’re worried that a credit check will hurt your credit score, you could still try and apply with a lender who performs a “soft credit check.” A soft credit check doesn’t impact your credit score, so you don’t need to worry about causing damage before you’ve even taken out the loan.2 Review potential lenders carefully, ask them if they perform soft credit checks and income verification to ensure you can actually afford to repay your loan. It’s also always a good idea to read customer reviews on sites like Google and Facebook. Are the lender’s customers happy with their product and service, or are they firing off one-star reviews and threats to take them to court? As always, use your best judgment, do your research, and make sure you’re working with a lending partner who can help you, rather than a predator who will trap you in debt and further hurt your credit.

One more thing about debt collectors before we go…

Sometimes collection agencies will mistakenly report you to a credit bureau, even if you don’t have any debts with them. If you do receive a random call from a collection agency, DO NOT immediately acknowledge the debt.

Every state has a statute of limitations after which a debt cannot be collected, and there’s a chance the call is about an old debt. If you acknowledge the debt, the statute resets.

Instead, request proof of the debt. The agency is required to send you proof within 30 days. That will help you understand if it’s an actual debt you must deal with, a debt where the statute has expired, or a total mistake.

If there is a mistake and the collections agency refuses to admit it, you can file a complaint with the Federal Trade Commission.3

References:

1 “How debts in collection affect your credit.” CreditKarma. Accessed on February 7, 2017 from https://www.creditkarma.com/article/accounts-in-collections.

2 Anderson, Caryn. “Does Checking Your Credit Hurt Your Credit Score?” CreditSesame. Accessed on February 7, 2017 from https://www.creditsesame.com/blog/credit/does-checking-your-credit-hurt-your-credit-score/.

3 Higuera, Valencia. “What to Do If a Debt Collector Asks for Money You Don’t Owe.” Accessed on February 7, 2017 from http://www.moneycrashers.com/debt-collector-money-dont-owe/.



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About the Contributors:

Gerri Detweiler’s passion is helping individuals cut through credit confusion. She’s written five books, including the free ebook Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, and her latest, Finance Your Own Business. Her articles have been widely syndicated and she’s been interviewed in over 3000 news stories. She serves as Head of Market Education for Nav, the first and only site that shows small business owners their free business and personal credit scores and tools for building strong business credit.

Jeanne Kelly, is an author, speaker, and coach who educates people achieve a higher credit score and understand credit reporting. #HealthyCredit is her motto. As the founder of The Kelly Group in 2000 and the author of The 90-Day Credit Challenge, Jeanne Kelly is a nationally recognized authority on credit consulting and credit score improvement.

Randall Yates, is the founder and CEO of The Lenders Network, an online mortgage marketplace that helps homebuyers find reputable mortgage lenders. As a part of Randall’s successful entrepreneurial career, he spends a chunk of time helping consumers understand their credit and lending his mortgage expertise to help them find the right type of loan. Randall Yates lives in Dallas, Texas with his two sons.

6 No Credit Check Loan Red Flags

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Welp. A kid just threw a baseball through your window and ran away before you could get his parents’ information. Now you need a loan to fix it. But what if your credit score isn’t exactly a home run? What are you going to do now?

It’s a fact of modern life: a “good” credit score (a FICO score of 680 or higher) can make little financial emergencies like these much more bearable. Unfortunately, just over half of American consumers have weak or bad credit.1 According to credit expert David Hosterman of Castle and Cooke Mortgage (@CastleandCooke), “Customers with bad credit can have trouble financing a home, renting a home, obtaining credit cards, car loans, student loans, and more.” And it’s not a problem that goes away overnight. Hosterman says rebuilding credit can “sometimes take years to complete.”

So how can people with bad credit get a loan if an urgent need arises? One option is a “no credit check loan.” And if these loans sound too good to be true, it’s because they often are. Many “no credit check” loans are nothing more than financial traps designed to suck away as much of your paycheck as possible. Keep an eye out for these red flags before you end up in an unaffordable situation.

Be suspicious of lenders when…


1. They Don’t Care About Your Income

If a lender doesn’t want to check your credit, make sure that they do check your employment and income. Why? If a lender wants to verify that you’ll be able to afford to repay your loan, it’s a signal that they’re legitimate and not trying to walk you into a debt trap.

If a lender doesn’t check your credit or your income, then it’s likely that they’re trying to sell you a loan you can’t afford. This is a classic predatory practice, because if you can’t repay your loan, you’ll be forced to roll it over (extending the loan for another cycle) and you’ll pay additional fees to do it. Suddenly, you’re sinking further and further in debt, and your predatory lender is making more and more money directly from you.

This unfair practice is a hallmark of payday lending, and it can trap borrowers in unexpected debt for months or even years.

2. Short Payment Terms

Any good lender wants you to have a real shot at actually paying back your loan in full. A payday lender, on the other hand, wants you to be trapped into rolling over your loans so that you can give them money forever. They’ll require you to pay back the entire loan, with interest, after only a few weeks—and sometimes less!

Instead, find a lender that will offer you an installment loan. David Bakke (@YourFinances101), a finance expert at MoneyCrashers.com, says that one of the main benefits of installment loans is that they “usually come with fixed interest rates, meaning that you know what your monthly payment is going to be.” A good “no credit check” lender will be certain that you have a source of income and then work with you to create a repayment plan over a longer term that you can handle.

3. They Talk About Interest Rates Instead of APR

According to David Reiss (@REFinBlog), a law professor and editor of REFinBlog.com, “The annual percentage rate or APR shows the total cost of a loan, including fees and interest. APRs allow potential borrowers to make an ‘apples-to-apples’ comparison between loans. It gives you a full and clear picture of how expensive a loan really is.” In other words, it’s a number that many “no credit check” lenders would prefer you never see.

They’d rather show you a basic interest rate, even though federal law requires APRs be used in most cases. Not only can that hide all sorts of fees, but it forces you to do some pretty complex math if you want to actually know how much you’ll be expected to pay. Friends never make friends do complex math problems, so if a lender isn’t talking in terms of APR, they’re likely not your friend.

4. They Want Your Car Title

Some “no credit check” lenders will accept your car title in return for a loan. The car is serving as collateral, which means it’s being used to guarantee that you’ll pay. This might seem like a reasonable deal at first. After all, you’ll be fine as long as you pay it back, right? Well, that’s a pretty big “if.” Since the lender is holding your car’s title, they’ll be able to seize it if you don’t make your payments. In fact, a recent study from the Consumer Finance Protection Bureau found that 1 in 5 title borrowers will lose their car!2 You never know what financial surprises could happen and it’s too big a risk to gamble on—especially if you need your car to get to work. If you were in a desperate situation before, having to walk or catch the bus to work certainly won’t improve things. These loans are unsafe at any speed.

5. They Don’t Have a Customer Service Line

The best “no credit check” lenders should be willing to work with you to make sure you can pay off your loan, even if something unexpected comes up. That’s why having good customer service is so important. If you know you’re going to have trouble making a loan payment, you should be assured that there’s a number you can call for help. E-mail might feel like a more modern form of communication, but nothing is as efficient as talking to another actual person. There’s less potential for misunderstandings, and you don’t have to worry about whether they’re receiving your concerns. Any company offering loans to people with poor credit is either looking to help them or to take advantage of them (read more in How to Shop for a No Credit Check Loan). If they won’t even give you a way to talk to them, they aren’t worth your time or your trust.

6. They Have Bad Online Reviews

Much like a hotel or a restaurant, you want to be sure your lender has the best online rating possible. After all, you wouldn’t give your money to a burger place that makes people sick, so why should you give your money to a lender that’s trying to make you broke? You’ll get over that burger in a day or two, but a bad loan could make you nauseous for years. When people get ripped off, they don’t tend to be quiet about it. Heed their warnings. Taking just a few minutes to look at reviews could save money and pain.


Sure, there are a lot of red flags when it comes to “no credit check loans,” but that doesn’t mean your situation is hopeless. You may qualify for a “soft credit check” loan from OppLoans. A soft credit check doesn’t affect your credit rating, so there’s no risk when applying!

The next time you need a loan, do yourself a favor and watch out for the red flags that indicate you’re dealing with a predatory lender. Seek out a safe, responsible, soft credit check installment loan. You’ll be able to repair that broken window without damaging your credit.


References:

    1. Detweiler, Gerri. “Most Americans Have Bad Credit, Study Finds.” Credit.Com. January 30, 2015. Accessed on February 1, 2017 at http://blog.credit.com/2015/01/most-consumers-have-subprime-credit-report-says-107535/.
    2. “CFPB Finds One-in-Five Auto Title Loan Borrowers Have Vehicle Seized for Failing to Repay Debt.” ConsumerFinance.gov. May 18, 2016. Accessed on February 1, 2017 at http://www.consumerfinance.gov/about-us/newsroom/cfpb-finds-one-five-auto-title-loan-borrowers-have-vehicle-seized-failing-repay-debt/.

About the Contributors: 

David Bakke is a finance expert who started his own personal finance blog, YourFinances101, in June of 2009 and published his first book on ways to save more and spend less called ““Don’t Be A Mule…” Since then he has been a regular contributor at Money Crashers.

David Hosterman (@CCMortgageLLC) is a credit and financial expert. He began working as a loan officer with Castle & Cooke Mortgage, LLC in 2008 and became a Branch Manager in 2015. David has been featured in CBS Money Watch, Forbes, MSN Money, and elsewhere.

David Reiss is a professor at Brooklyn Law School and director of academic programs at the Center for Urban Business Entrepreneurship. He is the editor of REFinBlog.com, which tracks developments in the changing world of residential real estate finance.

Is Checking your Credit Score Bad?

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Short answer? No.

Slightly longer answer? It depends.

For the complete answer, keep reading…

There are two types of Credit Inquiries: Hard Inquiries and Soft Inquiries

And when it comes to how they affect your credit score, they’re pretty much night and day.

Hard Inquiries

Hard inquiries happen whenever you are applying for new credit, like a mortgage, credit card, or personal loan. They usually require that your authorization before the lender can pull your credit history.

Hard Inquiries are recorded on your credit report and will stay on that report for two years. Since a hard credit inquiry is an indication that you are looking for a loan, the inquiry can have a negative effect on your credit score for up to a year.

Why is that? Well, according to experts at FICO, a borrower with six or more hard credit inquiries on their report is up to eight times more likely to file for bankruptcy than someone with no inquiries.[1] Those same experts also say that a typical hard inquiry can knock up to five points off your credit score.[2]

There is an exception, however, and it’s when you have several inquiries within the same 45-day period. Since it is typical (and a good idea!) for people to “rate shop” when applying for a mortgage, auto, or student loan, the credit bureaus will bundle all these separate inquiries together. You’ll still get dinged for the hard inquiry, but you’ll only get dinged once.

A typical hard inquiry can knock up to five points off your credit score.

Soft Inquiries

There are several different situations under which a soft credit inquiry might occur. Some of the most common include looking for a new apartment, getting hired for a new job, and checking your own credit score.

Basically, soft inquiries are when anyone other than a lender is looking at your credit score. Many credit card companies will run a soft inquiry before sending you a “pre-approved” credit card offer.[3]

The great thing about soft inquiries is that they do not affect your credit score. While soft inquiries are indeed recorded on your credit report, they are only visible to you. If a lender pulls a copy of your credit report, they will only be able to view your hard inquiries. So while soft inquiries do end up on your report, it’s basically as a technicality.

If you have bad credit and are worried that applying for a loan that could hurt your credit score, there are certain kinds of lenders (including OppLoans) that will only run a soft credit check while reviewing your application. Even if you apply and get turned down, it won’t affect your credit.

P.S. Did you know that you can request a free copy of your credit report?

It’s true! We swear!

In fact, it’s the law. Under the Fair Credit Reporting Act (FCRA), every person is legally entitled to receive one free copy of their credit report per year from each of the three major credit bureaus — TransUnion, Experian, and Equifax.[4] For those keeping score, that’s three free credit reports per year.

But first you have to ask. To get a free copy of your credit report, just visit www.annualcreditreport.com. If you find an error on your report, just follow this helpful guide from the Federal Trade Commission (FTC).

References:

  1. “The Difference Between Hard and Soft Credit Inquiries” TransUnion.com. Accessed November 11, 2016 from http://blog.transunion.com/the-difference-between-hard-and-soft-credit-inquiries/
  2. “What are inquiries and how do they affect my FICO score?” MyFico.com. Accessed November 11, 2016 from http://www.myfico.com/crediteducation/questions/inquiry-credit-score.aspx
  3. “Hard Inquiries and Soft Inquiries.” Credit Karma. Retrieved November 10, 2016 from https://www.creditkarma.com/article/hard_inquiries_and_soft_inquiries
  4. “Free Credit Reports.” Federal Trade Commission. Accessed November 19, 2016 from https://www.consumer.ftc.gov/articles/0155-free-credit-reports

What Does a “No Credit Check” Loan Really Mean?

What Does a No Credit Check Loan Really Mean?

If you have bad credit, getting a safe, responsible loan can feel impossible. After all, any legit lender is going to run a credit check. And once they see your score, they’ll just turn you down flat, right?

Wrong.

There are lenders out there who run credit checks but still lend to people with bad credit.

(We know, because we’re one of them.)

To explain how this works, we’ve gotta get some stuff out of the way first. Namely, we need to talk about the difference between hard credit checks and soft credit checks.

Hard credit checks

A hard credit check means pulling a full copy of your credit history.

Most often, a hard credit check occurs when a person is applying for new credit. Many lenders see too many hard checks as a sign that a person is desperate for credit, which makes the lenders less likely to lend to them. In fact, running a hard credit check can actually lower your credit score by up to five points!

According to the experts at FICO, a person with six hard credit checks within a one-year span is eight times as likely to file for bankruptcy than someone with no hard checks.[1]

Soft credit checks

A soft credit check returns much less data than a hard check. Instead of a person’s full credit report, it gives them a brief overview.

While hard credit checks have to be authorized, soft credit checks don’t. You know those pre-approved credit card offers you get in the mail? Those lenders likely ran a soft check on you before sending you the offer.

The great thing about soft credit checks is that they don’t show up on your credit report. Or rather, they don’t show up when other people look at your credit report. If you request a copy of your report, you’ll be able to see your history of soft credit checks, but other parties who look at your credit will not.

For all intents and purposes, soft credit checks do not show up on your credit history—and they definitely do not affect your credit score.

Okeedoke. Now that we’ve got that out of the way…

What are no credit check lenders?

Next time you see an ad for a “no credit check lender” just go ahead and replace the words “no credit check” with “payday” because they are usually one and the same.

The reason that payday lenders don’t check their customers’ credit is because they don’t care if their customers can’t pay their loans back.

Actually, you know what? Scratch that. They are actively counting on their customers not being able to pay their loans back on time. The more customers that can’t afford their loans, the more loans the payday lender gets to rollover.

What’s loan rollover?

It’s the worst. Really.

Loan rollover is a process in which payday lenders offer their customer an extension on the due date of their loan. It sounds nice at first, but it’s really just a chance for the lender to charge the borrower additional interest for borrowing the same amount of money.

Here’s an example:

You take out a $300 payday loan that costs $15 per $100 borrowed. The loan is due in 14 days, and you will owe $345 (The $300 that you borrowed + $45 in interest).

But when that 14 days is up, you find that you don’t have $345 to spare. So you roll the loan over. You only pay the $45 that’s due in interest, and you get another 14 days to pay back the $345 you still owe.

See what happened there? You pay the lender the $45 in interest, and then they charge you an additional $45 for the two-week extension. A loan that cost you $15 per $100 borrowed now costs you $30 per $100.

Measured as an annual percentage rate (APR), the true cost of this loan is pretty staggering: 390 percent. If you had that loan outstanding over a full year, you would pay almost four times what you borrowed in interest alone.

The real problem with no credit check loans

Now, a 390 percent APR might not seem to matter so much for a loan that’s only two weeks long, but that’s precisely why rollover is so sneaky and awful: the more you roll the loan over, the more expensive your loan becomes (read more in The Truth About No Credit Check Loans).

That’s why payday lenders don’t run a credit check on their potential customers. Whereas most lenders are concerned about whether their customers can afford to repay their loans, payday lenders are the exact opposite: They are hoping their customers can’t repay.

Don’t believe us? Well how about this:

According to the Consumer Financial Protection Bureau (CFPB), over 80 percent of payday loans are the result of rollover or reborrowing.[2] Basically, if payday loan customers could actually afford to pay their loans on time, the industry would go kaput.

Not. Great.

What about soft credit check loans?

Both “no credit check” and “soft credit check” lenders lend to people with bad credit, the kinds of folks who most traditional lenders would turn down. The big difference between the two is that “soft credit check” lenders genuinely care about whether or not you can repay the loan they’re offering.

That’s why soft credit check lenders check your credit before extending you an offer. They want to make sure it’s a loan you can actually afford. Unlike no credit check lenders, they don’t plan on rolling over your loan again and again and again. They intend to give you a loan that you can pay off the first time.

But that’s not the only difference. While payday lenders offer you short-term loans that you have to repay all at once (something that few borrowers can actually afford to do), soft credit check lenders usually offer long-term installment loans. These loans are designed to be paid off a little bit at a time, with equally sized, regularly scheduled payments.

And many times these loans are amortizing, which means that (long story short) you can save money by paying the loan off early, something you can’t do with payday loans.

You deserve better than a payday loan

At OppLoans, we run soft credit checks on all our applications because we care about our customers’ ability to repay the loans we’re offering. Plus, our loans are up to 125 percent cheaper than your typical payday loan. Applying for a loan won’t cause your credit score to go down, and you’ll be in much better, more responsible hands than you would with a payday lender.

References:

  1. “What are inquiries and how do they affect my FICO score?” MyFico.com. Accessed November 14, 2016 from http://www.myfico.com/crediteducation/questions/inquiry-credit-score.aspx.
  2. Burke, K., Lanning, J., Leary, J., Wang, J. “CFPB Data Point: Payday Lending.” Consumer Financial Protection Bureau. Accessed November 14, 2016 from http://files.consumerfinance.gov/f/201403_cfpb_report_payday-lending.pdf.

5 Must-Know’s Before Applying for a “No Credit Check” Loan

5 Must-Know’s Before Applying for a No Credit Check Loan

Picture this: You’re standing in front of your car, staring down at your bumper – or at least the place where your bumper used to be. Your actual bumper is lying in the road 50 feet away. Stupid deer.

You can’t drive a car without a bumper, so you’ll need to get it repaired. That’s going to cost money—money that you do not have on hand. You used to have a $1,000 emergency fund, but that got eaten up when your boiler decided to die in the middle of January.

You’re going to need to take out a loan to pay for the repairs. There’s no way around it.

Oh, and here’s the kicker: Your credit score is only 590.

That means a traditional bank loan is out, as are most personal loans offered by online lenders. Those lenders will check your credit and could give you the boot pretty much immediately.

It looks like you’re going to need a no credit check loan.

But before you sign that loan agreement, here are five things you need to know …

1. Stay away from payday and title loans

For real. If you have bad credit and need a fast cash loan, taking out a payday or title loan is pretty much the last thing you should do.

Both payday and title loans are short-term loans that come with interest rates around 15 to 25 percent. But those rates can be seriously misleading. When measured as an annual percentage rate (APR), payday loans have an average rate around 390 percent, while title loans have an APR of 300 percent.

What that means is they’re really, really expensive.

In addition to those high rates, these predatory loans are designed to be paid off in a single lump sum, which can be hard to do for many borrowers, which is why they will usually roll the loan over. Every time they do that, they increase the cost of their loan. That’s how a 15 percent interest rate can turn into a 390 percent APR! You can learn more in the article The High Cost of Payday Loans.

Sometimes, a no credit check loan is necessary—but steering clear of payday and title loans is always a must.

2. Make sure the lender checks your ability to repay.

This is something that a lot of payday and title lenders don’t do. That’s one of the reasons those loans are so dangerous.

With a traditional unsecured personal loan, the lender will lose money if you can’t pay your loan back. That’s why they always check to make sure that you can afford your loan.

But did you know that many no credit check lenders actually count on their customers not paying their loans back on time?

With predatory payday and title loans, borrowers who can’t afford their loans are more likely to roll the loan over and incur additional interest. Every time the loan rolls over, it becomes more and more profitable for the lender. Combine loan rollover with interest rates north of 300 percent, and you have a recipe for financial disaster.

Lenders that don’t confirm your ability to repay the loan are probably taking you for a ride. Do yourself a favor and just steer clear of them.

3. If possible, find a lender that does soft credit inquires

Just because a lender checks your credit score, that doesn’t mean they’re going to turn you down. And if they’re only running a soft inquiry on your credit, then applying for the loan won’t show up on your credit report.

There are two kinds of credit inquires: hard inquiries and soft inquiries. Hard inquiries return a lot more detailed information to the requester, but they also get recorded on your credit report. Too many recent inquiries can hurt your credit score, as it looks like you are desperate for a loan.[1]

Soft inquiries, on the other hand, only return a more general overview and are not recorded on your credit report. So even if you think your credit score is so low that no lender could possibly approve you for a loan, you should still consider lenders that run a soft inquiry while processing your application.

For one thing, running a soft inquiry means that the lender is considering your ability to repay. That’s a good sign they’re on the up and up.

4. Don’t forget: Defaulting on a no credit check loan could still hurt your credit.

Even if a lender isn’t checking your credit score, failing to pay that loan back could (and probably will) negatively affect your credit.

Some no credit check lenders might report your late or non-payments directly to the the three major credit bureaus (Experian, TransUnion, and Equifax). If you default on your loan, the bureaus will know, and the info will go on your credit report.

And even a lender that doesn’t report info to the bureaus could still sell your unpaid debt to a collections agency. Once it’s been sold to them, that collections agency will likely report the unpaid debt to the credit bureaus.

Likewise, a lender or a collections agency could take you to court in order to reclaim the money that you owe them. These usually result in your wages being garnished until the debt is fully repaid. A court decision against you will also go on your credit report.

Lastly, there are other specialty reporting agencies beyond the big three. Some no credit check lenders will report payment information to these businesses. That info could be used to deny you a bad credit or no credit check loan in the future.[2]

5. Do shop around

Remember, a loan is basically a product. So when you’re looking to buy one, you shouldn’t treat the process any different than shopping for a pair of jeans or a new carburetor.

Shop around! Different lenders are going to be offering different loan products with different terms and different rates. Even if it’s tempting, or you’re running short on time, don’t just take the first offer you receive.

One of the great things about online lending is that you have way more options than you would have just 10 or 15 years ago. There are lot of personal lenders that will let you apply for a loan online and will deposit the funds into your account once you’re approved.

Take a spin on Lendingtree to see what kind of loans are available to you, and make sure to check out the customer reviews to see what kinds of experience other people have had. Odds are, the right no credit check loan for you is out there somewhere. You can read more in Bad Credit Helper: How To Shop for a Credit Counselor.

It’s up to you to find it.

If you have bad credit and need a loan, a personal installment loan from OppLoans is always a safe, reliable choice. You can apply online by filling out a simple application, and you will receive a decision within minutes. We only run soft credit inquiries, which means that applying will not hurt your credit score, and we always verify our customers’ ability to repay.

Personal installment loans from OppLoans come with larger principals ($1,000-$5,000), longer terms (6-36 months), and lower rates (up to 125 percent less) than your typical payday or title loan. Our loans are designed to be repaid in a series of regular, manageable payments that won’t bust your budget. We don’t charge any prepayment penalties either, so paying your loan off early will save you money!

At OppLoans, we think you deserve better than a payday loan. To learn more, or to apply for a loan today, just visit our homepage, www.OppLoans.com.

References:

  1. “Hard Inquiries and Soft Inquiries.” Credit Karma. Retrieved November 10, 2016 from https://www.creditkarma.com/article/hard_inquiries_and_soft_inquiries.
  2. “If I take out a payday loan, could it hurt my credit? Consumer Financial Protection Bureau. Retrieved November 10, 2016 from http://www.consumerfinance.gov/askcfpb/1635/if-i-take-out-payday-loan-could-it-hurt-my-credit.html.