Do No Credit Check Loans Show up on Your Credit Report?
No credit check loans aren’t known for offering lots of fancy perks. They’re a way to provide you the cash when you require it, urgently. However, are these loans so no-frills that they don't even get reported on your credit report? Is the lack of reporting a good or a bad thing?
How do no credit check loans work?
If you have good credit, you may have an option to get a personal loan from a traditional lender like a bank or a credit union. However, if you have bad credit, your options are going to be more limited.
Traditional lenders will conduct a hard credit check when they evaluate your application, and these checks can negatively impact your credit score. While the damage is small and temporary, it’s still the last thing for someone with bad credit—especially when they anticipate getting denied.
That’s where no credit check loans come in. These are smaller loans available both online and from brick and mortar lenders—designed to provide emergency financial assistance to people with bad credit. As the name suggests, no credit check loans will not involve a hard check being run on your credit history.
There are three main kinds of no credit check loans. The first is payday loans sometimes referred to as cash advance loans. These are small dollar amount loans with very short repayment terms and extremely high interest rates. A typical two-week payday loan with a 15% interest rate can result in an annual percentage rate (APR) of nearly 400% (Read the OppU Ultimate Guide to No Credit Check Loans here for all the details on no credit check loans)!
Title loans are also common, but, unlike payday loans, these are secured by collateral—namely, the title to the borrower’s car or truck. While you can generally borrow a larger loan amount with a title loan than a payday cash advance, but you’ll still encounter APRs averaging around 300%!
Lastly, there are installment loans for individuals with bad credit, which are structured more like traditional loans. Unlike payday and title loans, which you pay off in a single lump sum, installment loans are paid off in a series of fixed, regular payments scheduled over a period of months or years, rather than weeks.
How does credit reporting work?
Your credit score is based on information in your credit reports. These are documents that track your history as a user of credit. Generally, the information stays on your credit reports for seven years, although some information sticks around for a longer duration.
You have three different credit reports, one each from the three different credit bureaus: Experian, TransUnion, and Equifax. These credit bureaus rely on businesses like lenders, landlords, and debt collection companies reporting credit related information to them.
Some businesses only report to one or two of the credit bureaus, not to all three. This is why information can vary across your reports. For instance, your Experian report could have a higher or lower score than the one created from your TransUnion report.
Credit reporting is a two-way street. Businesses that check consumers’ credit scores rely on the credit bureaus to provide them with accurate scores and credit histories, while these bureaus rely on these same businesses to report the very same information.
No credit check loans don’t show up on your report.
With no credit check lenders, however, there is no two-way street. In most cases, there isn’t even a one-way street. These lenders neither rely on the credit bureaus for information nor do they report to them.
Case closed, right? Actually, no. Not quite yet.
There’s one big exception.
While no credit check lenders don’t report payment information to the credit bureaus, debt collectors most certainly do. If you default on your no credit check loan, it is highly likely that the debt gets sold to a collection agency. If that happens, and the debt collector reports your account to the credit bureaus, your credit score might take a big hit. This is one of the annoying things about no credit check loans: Your score might not improve from paying off the loan on time, but failing to make your payments might negatively impact your creditworthiness.
Consider a soft credit check loan instead.
There is an alternative to choosing no credit check loans when you require some quick cash. You could apply for a bad credit loan that performs a “soft” credit check instead. Unlike hard checks, soft checks don’t end up on your credit report and don’t impact your credit score.
What’s more, a soft credit check lets you know that the lender is taking your ability to repay into account. This makes it less likely that you’ll borrow more than you can repay and end up either defaulting entirely or stuck in a costly cycle of debt.
Furthermore, finding a lender who performs a soft credit check, you should focus on a lender that checks your ability to repay—whether that’s a soft check, an income verification, or another type of underwriting process. Anything is preferable to no check at all.
Additionally, some of these soft credit check lenders may even report your payment information to the credit bureaus! So if you make your payments on time, that information will go on your report and may help you build a better credit history!
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