Understanding Your Credit Score


When applying for an unsecured personal loan, your credit score is going to be really important. Because these loans aren’t backed by collateral, the lender stands to lose a lot of money if you cannot pay the loan back. That’s why lenders need to understand how reliable you are as a borrower. And what tells them that? Your credit score! Here’s a detailed breakdown of what your credit score is, how it works, and what you need to know as a borrower.

What is a FICO Score?

Now, when we say “credit score”, what we actually mean is “FICO credit score.” This is by far the most widely-used type of credit score today, and it’s the one you’re going to want to pay the most attention to. The FICO score was created by Fair, Isaac and Company in 1989. (The company is now just called FICO.) It is based on a scale between 300 and 850—the higher your score, the better your credit rating.

Here’s how the scores break down:

  • 720-850 – Great Credit
  • 680-719 – Good Credit
  • 630-679 – Fair Credit
  • 550-629 – Subprime Credit
  • 300-549 – Poor Credit

How is Your FICO Score Determined?

Your credit score is based on the information contained in your credit report. This document tracks your history of credit use over the past seven years. It has records of how much you owe, what kind of credit you’ve used, your history of on-time payment, whether or not you have any outstanding collections notices against you, and whether you have ever filed for bankruptcy or had a tax lien placed on your property.

When FICO is determining your credit score, they weigh different factors by their level of importance:

  • Payment history – 35%
  • Amounts owed – 30%
  • Length of Credit history – 15%
  • Credit Mix – 10%
  • New Credit Inquiries – 10%

You can find your credit score through your bank, credit card company or an important document called your credit report. Credit reports are compiled by the three major credit bureaus—Experian, TransUnion and Equifax—and the information on the report can vary depending on the bureau. Credit reports can also contain errors on them, so you’ll want to check your credit report to make sure it’s accurate.

Luckily, everyone is entitled to request one free copy of their credit report per year from each credit bureau. To request a free copy of your report, simply visit: AnnualCreditReport.com

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Chapter 3: Safer Borrowing


Avoiding predatory lenders is a great first step towards borrowing responsibly, but it’s not the entire journey. For people with great credit, finding a loan with favorable terms is easy. But what about people with not-so-great credit? There are options out there, even if they might be a little harder to find. Trust us, doing the extra work to apply for these loans will be well worth the hassle. And you can even apply for some of them online!

Personal Installment Loans

These are loans that give you the chance to pay back what you owe slowly over time. Some of these are amortizing, which means that every payment you make goes towards both the principal and the interest. So every time you make a payment, the amount of interest that’s accruing goes down. That means you’re saving money! If you have poor credit, these loans are still going to come with higher APRs, but in many cases, they are still much better than what you would get with a payday or title loan.

Borrowing from Friends and Family

If you’re in a bind and facing down the prospect of taking out a predatory payday or title loan, it’s always a good idea to see if someone you know could lend you the money instead. There are a lot of potential benefits to this option, including more flexible repayment terms and lower interest rates. (If you’re lucky, your friends or family might not even charge you any interest at all!) But there are also some pretty obvious downsides: failing to pay this loan back could ruin your relationship with the person who helped you. To prevent that, consider having a contract written up that outlines the terms of the loan. That way, both of you will be on the same page from day one.

Payday Alternative Loans (PAL)

These are a specific kind of loan that you can find at credit unions across the country. They were specifically created to battle predatory lending. They come with principals between $200 and $1,000, terms that range from one to six months, and APRs that are capped at 28%. These loans are offered by credit unions that belong to the National Credit Union Administration (NCUA).11 However, this also means that you must have been a member of that credit union for at least one month before you will qualify for the loan. These can be a great option, but they are not available to everyone.

Payroll Advance

If you are in good standing with your employer, you might be able to get an advance on your next paycheck. This simply means that they could give you part of what you are owed ahead of schedule. The great thing about this option is that these advances come with either low interest or no interest, but they typically must be paid back with your next paycheck. You should also make sure to only use this option sparingly because use (or overuse) could damage your relationship with your employer.

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Chapter 2: The Predatory Effect of Payday Loans


Now that you’ve met the players, it’s time to learn more about the game. From coast to coast, predatory lenders are targeting low-income communities with their dangerous, high-cost loans. Even though these types of loans are banned in many states, there are also many areas where they are barely regulated at all. Did you know that in Missouri you can get a payday loan with an APR that’s nearly 2,000%? Or what about Texas, where payday lenders are exploiting legal loopholes to have borrowers who default on their loans thrown in jail? And in Virginia, title lenders are issuing misleading “consumer finance” loans that allow them to raise their interest rates even higher?10

In this chapter, we’re going to explore the realities of a country where predatory lenders are allowed to run rampant. To begin, let’s talk about how easy it is for the victims of predatory lending to fall into…

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Meet the Predators: Title Loans and Title Lenders


The “title” in “title loan” refers to the auto title that the borrower uses to secure the loan. When applying for a loan, the borrower brings in the physical copy of their auto title and hands it over to the lender, who then either holds onto it or registers a claim against it and gives it back. To receive a title loan, the borrower must own the vehicle free and clear. This means that if you took out an auto loan to buy your car, truck or motorcycle, you could only apply for a title loan once you have paid that auto loan off. (Of course, just because you can apply for a title loan, that doesn’t mean that you should.)

The principal amount for any title loan is going to depend on the value of the vehicle that’s serving as collateral. This means that, first, the lender must inspect the vehicle to determine how much they could possibly sell it for. And even once they’ve determined the vehicle’s maximum value, the amount of the loan principal isn’t going to be anywhere close to that. On average, the typical title loan is only worth 25-50% of the vehicle’s full value. (The average loan amount is a little under $1,000.)5 Already, it’s becoming clear that the terms of the loan are heavily weighted towards the lender.

Once the contract for the loan has been signed, the borrower gets to leave the lender with the cash in their pocket. They also get to keep their car while the loan is outstanding. But that’s where the benefits end. The average length of a title loan is one month and the average interest rate is 25%. 25% might seem high, but it isn’t. Given that it’s a full 25% over a single month, it’s actually super high!

Why Are Title Loans Predatory?

Ask yourself: if you had 30 days to pay back $1,250, would you be able to?

Just like with payday loans, it helps to look at the APR. With an average rate of 25%, the standard title loan has an APR of 300%! That means that if the loan were outstanding for a single year, the borrower would pay three times what they originally borrowed in fees and interest alone!

But with a one-month loan, is the annual cost something that borrowers are going to have to worry about? With title loans, the answer is definitely yes. Many borrowers are unable to pay the loan back in full after only one month. (Ask yourself: if you had 30 days to pay back $1,250, would you be able to?)

Title lenders know this; in fact, they’re counting on it. So, what they do is offer to extend the term by another month as long as the borrower agrees to pay back the fees and interest that they already owe. But it’s not like that extra month is coming free of charge. The borrower still owes an additional 25%. After two months, the borrower is already paying a rate of 50%. In some cases, title loans are outstanding for years, because the people simply cannot afford to pay anything towards the principal.

“Title lenders can seize the vehicle in the event that the borrower cannot repay.”

Because the borrower’s car was used as collateral for the loan, title lenders can seize the vehicle if the borrower cannot repay. This is a process called repossession. The lender then gets to sell the vehicle to recoup their losses. In some states, they don’t even have to pay you the difference if they sell the car for more than you owed. It’s a pretty great deal for them, but it comes at your expense.

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Can a No Credit Check Loan Actually Hurt Your Credit?


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. You can read more in The Truth About No Credit Check Loans.

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


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/.


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


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.


    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.

6 Common Credit Myths Debunked!


Rod Griffin, the Director of Public Education for Experian, sets the record straight about what does—and what definitely does not—affect your credit score.

Ever heard that getting 10,000 followers on Twitter can raise your credit score by 50 points? Or that your income determines your credit score?

There’s a lot of so-called “information” about credit scores, credit reports, and personal loans that you can find online. And—shocker—a lot of it isn’t true.

We asked expert Rod Griffin (@Rod_Griffin), Director of Public Education for the credit bureau Experian to sit down with us and debunk some of the most common myths because, when it comes to your credit, it pays to separate the fake and the factual.

MYTH #1: If You Pay a Bad Debt, It Will Be Deleted from Your Credit Report.

Rod says: “That’s not true. If you have a collection account and you pay it off, it will be updated on your credit report to show that it’s been paid, but it’s going to be on that credit report for seven years from what we call the “original delinquency date” of the debt.

The original delinquency date is simply the date that the account first became late, and it’s the most important date in the credit report because it determines when negative information is deleted. So if you have an account that becomes late, and you never catch up on it, it will get charged off as a loss, and you get sent to collections. Under federal law, the collection agency must report the original delinquency date, so it comes off at the right time.”

MYTH #2: You Should Only Pay 95% of Your Credit Card Balance Each Month.

Rod says: “The myth here is that you need to keep a balance on your credit card in order to help your credit score—and that’s just not true.

The ideal thing to do is pay your balances in full each month if you can. When you pay a balance in full each month it keeps that credit utilization rate [how much of your credit limit you’re using] at essentially zero, which is a low as you can keep it. And you don’t have to pay interest on your remaining balances, so it saves you money.”

MYTH #3: A Divorce Decree Separates Joint Accounts and Removes You from Responsibility for That Debt.

Rod says: “It does not. A divorce decree does not break the contract with the lender. A divorce decree just says that “I am taking responsibility for paying this debt” and “my ex-spouse is taking responsibility for that debt.” And it’s an agreement between you and the court. It doesn’t change the contract with the lender. Read more about financial mistakes you should avoid in our blog post 10 Things You Shouldn’t Do During A Divorce.

So if your ex doesn’t pay a debt that they’re supposed to pay, but it’s joint account, it can still hurt your credit history. In order to change a contract with a lender when you’re going through a divorce, you must go to the lender, and they must agree to change that contract. They won’t necessarily do that. They’re not bound to change it.

So for example: If you have a mortgage, and it’s joint with the spouse that you’re divorcing, you might have to essentially get a new mortgage to pay for that home to separate your spouse from that account. A lender might not agree to do that if you don’t qualify. This myth can really get people into a lot of trouble. Since it’s an angry bitter time, quite often, one spouse or the other will decide they’re going to hurt the spouse they’re divorcing and run up their credit card bill. Then they find out that they’ve hurt themselves as badly as they’ve hurt the other person.”

MYTH #4: You Can Pay Someone to Remove Accurate Negative Information from Your Credit Report.

Rod says: “You cannot. If someone says that they can remove accurate information if you pay them, they’re actually violating federal law. So be very cautious about some who says, ‘If you pay me, I can fix your credit.'”

MYTH #5: Disputing Information on Your Credit Report Will Hurt Your Credit Scores.

Rod says: “That too is false. And a relatively common myth. If there is something in your credit report that you believe is inaccurate, you should dispute it. It’s free. Go to www.Experian.com/dispute and follow the instructions. If you have a personal copy of your credit report, you can enter your number for that report and it will pop up and you can go through it. If you don’t have a report, you can give us some information and we will provide you with a free report right there on the spot. It’s very easy and free and does not affect scores or credit decision in any way.”

MYTH #6: Employers Get Credit Scores and Use Them to Decide Whether You Get a Job.

Rod says: “Absolutely false. Employers never get credit scores. They get what we call an ’employment insight report’ which is a truncated version of a credit report, but they never get a credit score. That’s a very common myth. The employment insight report doesn’t include account numbers because they don’t need that kind of information. They use the information on that report to verify the information you provide in your app. They use it as an identity verification tool.

They will also use the information on that report, for example, if you are applying for a job that involves handling the company’s money. If you’re going through financial difficulties and you’re going to be handling a company’s money, it might be an indicator that they should look further into your background so that they can understand that you wouldn’t be tempted to commit fraud, for example. The other reason that businesses use credit reports is that they can verify your identity for security purposes. So, important and valid reasons to use a report. But employers never get a credit score.”

If you want to know more about how the information on your credit report affects your credit score, check out Rod’s answers in our blog post, Let’s Get Creducated!

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About the Contributor: 

Rod Griffin is Director of Public Education for Experian. He leads Experian’s national consumer education programs and supports the company’s community involvement and corporate responsibility efforts. Rod oversees the company’s financial literacy grant program, which awarded more than $850,000 in 2015 to non-profit programs that help people achieve financial success. He works with consumer advocates, financial educators and others to help consumers increase their ability to understand and manage personal finances and protect themselves from fraud and identity theft.

Rod says, “My goal is to help people use a credit report to be a financial tool instead of a mysterious thing that lenders look at and take into a back room and tell you you’re approved or you’re not. I work to help any consumer be better prepared to get the credit they need, at the time they need it, and at rates and terms that are favorable to them.”

Before you pursue a “No Credit Check Loan,” here are the 5 simple facts you need to know.

Do you know your credit score? And—just as importantly—are you happy with it? Most of us aren’t. According to a recent Chase survey, two thirds of Americans want to improve their credit score, and for good reason.[1] A high FICO score will save you money on interest rates when borrowing money. It can also help you get the next apartment or used car you want, or even help you get that job that comes with a bigger paycheck—so you can get the condo or new car you really want).

Credit scores can be improved, but it takes time. If you need money now and your score is less than average—or even just plain bad—you might find yourself looking for a “no credit check loan.”

A no credit check loan is exactly what it sounds like: a loan in which the lender does not check your credit score. It’s a fairly simple concept with some pretty big implications.

A no credit check loan can sound great. You get the money you need now, your lender doesn’t need to check (and judge) your credit score, and you get to move on with life. Simple, right? Well, like all major financial decisions, pursuing a no credit check loan is something you’ll want to consider carefully. There are right ways—and very wrong ways—to get the money you need now through a no credit check loan.

In this article, you will learn the basics about credit, what a “no credit check loan” is, and how to get the safest no credit check loan possible.

1. What is credit?

There are purchases and expenses in life that simply cost too much for most of us to afford at one time: funding an education, buying a home, financing a major car repair. In these situations, most people rely on savings or credit. If you’ve got a healthy savings account, great! If not, you’ll want to understand how to manage your credit correctly so you can deal with unexpected expenses and keep up with your major bills.

Credit is the modern system that allows consumers to spend money that they don’t quite have yet. In essence, when you’re using credit, you’re borrowing money. You’re expected to pay it back plus interest (which is the fee the lender or creditor charges you to borrow that money).

So how much of this credit is yours to spend? That number is called your credit limit and it’s determined by several factors including your credit score and credit history. All of this data is collected by credit bureaus and compiled into your credit report. Your credit report contains a number called your credit score, which measures how likely you are to repay your debts. If you borrow money and pay it back promptly, you can expect your score to rise. Max out your credit card and never pay it back and you can expect your score to drop. The lower your score, the less “creditworthy” lenders will view you.

A low credit score can have a major negative impact on your life. You can be denied places to live by landlords, charged higher interest rates when creditors do lend you money, and even be rejected by potential employers.

Score are graded on the FICO system, between 300—850. The higher your score, the more creditworthy you’ll seem tp lenders.

720-850Great Credit
680-719Good Credit
630-679Fair Credit
550-629Subprime Credit
300-549Poor Credit

If you don’t know your credit score, you can check it out here at FreeCreditReport.com.

Bottom line: Credit is a great financial tool when used and managed wisely. When used recklessly, credit can cause severe financial problems that can take years to erase.

2. What is a no credit check loan?

All right, let’s say you’ve checked your credit and you have a score of 600. That would be considered “subprime”—meaning less than average. The good news is you can improve that score over time. (You can read more about that here in the OppLoans blog.) The bad news is that you still need money now and the bank has just denied you a loan. So what are you going to do?

You may find yourself pursuing a personal loan which is, simply, a financial transaction between a borrower and a lender. The borrower is requesting the use of the lender’s money now in the form of a principal loan amount. The lender then must decide whether or not to approve the loan, and if they do, how much to charge the lender for the privilege of borrowing the money. (This is called “interest.”) The loan principal and interest are always expected to be paid back at the end of the loan term.

So how does the lender decide if the borrower is creditworthy? They can do this several ways, but one method is to check the potential borrower’s credit score and credit report. If you have good credit, then you’re likely to be approved for many loans from traditional financial institutions like banks and credit unions. But in our example, a FICO score of 600 will likely send you looking for lenders who don’t check your credit, lenders who—in other words—offer no credit check loans.

3. Are no credit check loans safe?

There are many different types of no credit check loans. You may be offered a no credit check loan in the form of a personal installment loan, a payday loan, a title loan, or other forms of loans. Some of these are safe, responsible, financial decisions that you can make today to address your immediate need and position yourself for future financial success. Others, however, are predatory loans designed to trap borrowers in cycles of debt for months, or even years, to come.

No credit check loans are offered by both safe, legitimate lenders and predatory lenders alike. What distinguishes between a safe and a dangerous financial product can be broken down into three main differentiators: rate, term, and ability to repay.

  • Rate: Rate is the cost of borrowing money. This is generally expressed as either the “interest rate”—the percentage of a principal loan amount charged to a borrower—or, if you extend that number over the course of a year, the annual percentage rate (APR). While it’s important to understand both the interest rate and the APR, the APR is the more critical number to consider when evaluating a loan. For instance, if you borrow $100 at an APR of 400%, that means over the course of a year, you would pay back $400 just for the “privilege” of borrowing $100 now.
  • Term: Term is the period of time between the funding of a loan and when the principal and all fees must be repaid. Generally, the longer the term, the lower your monthly (or weekly, or biweekly) payments. Similarly, the shorter the term, the higher your payments. Short terms of two-weeks or thirty days are closely associated with predatory payday and title lenders.
  • Ability to Repay: Checking a borrower’s ability to repay is the single most important identifier of a reputable lender—whether it’s a mortgage broker, a personal installment lender, or other lender.[2] If they’re evaluating whether or not you can actually repay your loan, that’s generally a good sign. For instance, socially responsible lenders will look at your income, employment, and banking history, and make a determination about whether or not you will be able to afford to make your payments according to the interest rate and term of your loan. Lenders who do not consider your ability to repay are likely trying to take advantage of those in need. They do this by trapping customers in short-term, high-interest loans that are exceedingly difficult to repay. When the borrower cannot make their payments, the predatory lender will try to “roll” them over into a new loan (with new fees) or “repossess” any collateral used to secure the loan, like something as valuable as your car. Gulp!

Once you understand the rates and terms that a potential lender offers you (and they’ve checked your ability to actually repay the loan), you can further evaluate the lender by checking their customer reviews online and with third parties like other online lending platforms and the Better Business Bureau.

Ask yourself, does this lender have happy customers who leaving glowing reviews and high ratings, or do customers scream at them online and beg others to stay away? Does the lender have a high rating on BBB.com, a low one, or none at all? Can you find the lender on reputable financial websites like LendingTree and CreditKarma.com or are they nowhere to be found outside of their own website—which could disappear at any time?

Do your homework and you can find a safe, no credit check loan from a reputable lender accredited by the Better Business Bureau.

Bottom line: No Credit Check loans can be very safe, or very dangerous—depending on your lender and the rates and terms they offer.

4. What types of no credit check lenders should I avoid no matter what?

If you’re seen as a high risk borrower with a low FICO score, there are still many lenders who will try to do business with you. The hard truth though is that the vast majority of these lenders are predatory and are simply trying to take advantage of the financially vulnerable. Here’s what you should know before endangering yourself and your money.

A predatory lender is an online or storefront lender who offers loans at very high annual percentage rates (APRs) or for short terms or both, to those who very likely will not be able to pay the loan back. Examples of predatory lenders include payday and title lenders, and even pawn shop brokers. No matter how attractive that no credit check short-term loan from a predatory lender might seem, you should always stay away. Predatory lenders didn’t earn that nickname by playing fair with their customers. Here’s what you need to know to stay safe:

Payday Lenders: You’ve probably heard quite a bit about payday lenders. They’re frequently in the news—and always for the wrong reasons. The Consumer Financial Protection Bureau has called payday lending “debt traps.” Short terms averaging only 14 days, high interest at nearly 400 percent, penalty fees and the high risk of rollover make payday loans a perfect storm of predatory lending practices.[3]

Auto Title Lenders: Is there anything worse than a payday lender? Yes, and they’re called Auto Title Lenders. You’ve probably seen their storefronts and TV commercials. They promise quick cash loans, and the average principal amount is $940. However, the average time it takes to repay is 10 months, during which the borrower pays a shocking $2,140 in interest and fees.[4] That’s outrageous and what makes it even more predatory is the consequence of not paying it back. These loans are called “title loans” because they require borrowers to sign over their car (or motorcycle or boat) titles to the lender. If and when you can’t repay, the lender “repossesses” your car. How are you going to get to work now?

Pawn Shop Brokers: Say you need some quick cash but don’t want to sell any of your valuables. You might find yourself considering pawning something pricey that you own—a guitar, a computer, a power tool. If you take it to a pawnshop, the pawn broker may give you a small loan based on a fraction of the perceived value of the item and then keep your valuable. The only way you can get it back is to pay back the loan and the interest—as high as 240% or more.[5] If you can’t repay (and many can’t), you lose that item you were trying to avoid selling in the first place. A great deal for the pawn broker, a heartbreak of a deal for you.

5. How can I get a safe no credit check loan?

Like all loans, the safety and responsibility of no credit check loans vary from product to product, and lender to lender. The best way to tell if your no credit check loan is safe or not is to ask yourself the following questions:

  • Is this loan secured or unsecured? As discussed, a secured loans mean that the borrower has to put up a major piece of collateral (like your car) to secure the loan. If you do, you can easily find yourself losing that vehicle, which, in turn, can make it hard to get to work and to get more money. If it’s a secured loan, it’s probably not safe for you. Look for unsecured personal installment loans rather than predatory payday or title loans.
  • Does the lender consider my ability to repay? Are they looking at your employment and paychecks and factoring in how likely it is that you’ll actually repay the loan? If they’re not then they are probably trying to walk you into a cycle of debt.
  • What kind of reviews does this lender have online? Check Google, Facebook and elsewhere. What do their customers say about them? Are the customers happy and satisfied with the financial products they received? Or are they furious with the lender who offered them 400% APR on a short-term loan?
  • What kinds of rates and terms does the no credit check lender offer? To find a more affordable no credit check loan, choose an installment loan instead of a payday loan. An installment loan will afford you the ability to repay over time—up to 36 months, rather than just a simple two weeks.


A no credit check loan can be a useful and responsible financial choice, if it’s made correctly. If you need money now, for any reason, and you have a low credit score—whatever you do—don’t settle for a dangerous predatory loan that will leave you and your family in worse financial shape than you may be now.

By understanding what credit is, why it matters, and what your credit score is, you can take the necessary first steps to finding a safe, no credit check loan from a reputable, socially responsible lender. Knowing the dangers of predatory lenders and their toxic products like payday loans, title loans, and pawn shop loans will help you avoid them—even though they’re aggressively marketed as fast cash solutions for the financially vulnerable. And finally, once you have identified safe and responsible lenders, reviewed their BBB accreditations and customer reviews, you’ll be informed and ready to find the right no credit check loan for you.

Why OppLoans

If you’re looking for a loan that’s safe, responsible and affordable, consider applying today with OppLoans.

OppLoans is the nation’s leading socially-responsible online lender and one of the fastest-growing organizations in the FinTech space today. Embracing a character-driven approach to modern finance, we emphatically believe borrowers deserve a dignified alternative to payday lending. Highly rated on Google and LendingTree, OppLoans is redefining online lending through caring service for our customers.


  1. Mettler, Chris. “Two in Three Americans Want to Improve Their Credit Score.” CompareCards.com. Accessed December 7th, 2016 from http://www.comparecards.com/blog/two-in-three-americans-want-to-improve-their-credit-score/
  2. “What is the ability-to-repay rule? Why is it important to me?” ConsumerFinance.gov. Accessed December 7th, 2016 from http://www.consumerfinance.gov/askcfpb/1787/what-ability-repay-rule-why-it-important-me.html
  3. Silberman, David. “We’ve proposed a rule to protect consumers from payday debt traps.” ConsumerFinance.gov. Accessed December 7th, 2016 from http://www.consumerfinance.gov/about-us/blog/weve-proposed-rule-protect-consumers-payday-debt-traps/
  4. Sullivan, Bob. “Pay $2,140 to borrow $950? That’s how car title loans work” NBCNews.com. Accessed December 7th, 2016 from http://www.nbcnews.com/technology/pay-2-140-borrow-950-thats-how-car-title-loans-1C8703205
  5. Reiter, Margaret. “Disadvantages of Pawnshop Loans” NOLO.com. Accessed December 7th, 2016 from http://www.nolo.com/legal-encyclopedia/disadvantages-pawnshop-loans.html

No Credit Check Loans

Applying for a loan at OppLoans does NOT affect your FICO® credit score!

For many of us, there will come a time when we feel like we need to take out a loan. Why? Because, unfortunately, most people are not prepared for a financial emergency:

When an unexpected expense like a car repair or surprise medical bill hits, searching for a loan may seem like your best option. But borrowing money is never a simple decision, especially if you have bad credit.

You may have heard that checking your credit actually hurts your credit. This can be confusing and frustrating, especially if you need to borrow money. You may be asking, “I have bad credit, and I need to borrow money, but won’t checking my credit make my credit worse?”

For the many Americans who need to borrow money but don’t want their credit “dinged” any further, they may find themselves looking for a financial product called a “No Credit Check Loan.”

So what is it?

What is a No Credit Check Loan?

A No Credit Check Loan is typically a type of loan in which a lender determines the “creditworthiness” of a potential borrower without conducting a “hard” credit check.
This can be appealing to potential borrowers who are concerned about the condition of their credit. A “no credit check loan” may seem like a good fast cash option but there are always risks. Educating yourself is the best way to make the safest borrowing decision for you.

The world of No Credit Check Loans

If you’re looking for a No Credit Check Loan, chances are you believe you have bad credit. So do you? There’s a way to find out.

Maybe you’ve had credit cards before and had trouble managing them. Maybe you missed some payments, maxed out the cards, or just got way over your head into debt. This could leave you afraid to even check your credit score.

The keys to understanding your credit (and how to improve it) is to know your credit score and understand what’s on your credit report.

Why you should check your credit score

Don’t be scared to check your credit score. It’s an important number and knowing your credit score (even if it’s bad) will have benefits. Here’s why you should check your credit score.

  • You’ll know how you measure up.
  • Learning your credit score will tell you where you fall on the spectrum of credit users. Credit scores fall on a range from 300 to 850. You might not have a credit score of 800, but then, neither do 99% of other credit users.
  • Credit improves slowly. If you have no credit, it could take three to six months of credit usage to bring your credit file to a scorable level. The sooner you start, the sooner you’ll see results!
  • Something could be wrong. If your credit score is wildly higher or lower than what would expect, that could indicate there’s an error in the calculation or you’ve been a victim of identity theft. Knowing your credit score is the first step in identifying if something is amiss.
  • You can use your credit score to save money! The higher your credit score, the lower interest you can expect to pay on loans, mortgages and other major financial decisions. When you know your score, you can improve it and use it to secure the lowest rates available to you.

How to Check Your Credit Score

  1. Check your credit card statement. Many of the major credit card companies offer your credit score on your monthly statement which you can usually access online.
  2. Buy your score directly at MyFico.com.
  3. Get your “free” credit score from subscription sites like FreeCreditScore.com or Credit.com, (“Free” can sometimes mean signing up for a monthly subscription that includes a free trial period. Always make sure you understand what you’re signing up for.)

Why you should request your credit report

Credit Must Knows:

  1. The 2017 average credit card balance was $6,354
  2. The 2017 average credit score was 700
  3. 15% of families spend more than they make each month.
  4. 43% of Americans spend more than they make monthly and use credit cards to cover the gap.
  5. In 2018, total credit card debt reached $810 billion.

How to Request Your Credit Report

  1. Visit wwww.AnnualCreditReport.com. (Annual Credit Report is the only government authorized website where you’re entitled to access a credit report annually for free.)>
  2. Enter your personal information like name, address, birthdate, social security number and other items.
  3. Request the reports you want from either Equifax, Experian or TransUnion.
  4. Verify your request
  5. Print out and safely store your information
800-850Exceptional Credit
740-789Very Good Credit
670-739Good Credit
580-669Fair Credit
300-579Very Poor Credit

(Source: Experian)

If you have weak credit (typically a FICO score of 620 or below), it can be difficult for you to get a loan from a bank or even from most online lenders. A no-credit-check loan from a direct lender can then be very attractive.

But you need to take several things into account before making that final decision. Spend a little time doing research, and you’ll be much better off in the long run. Avoid predatory loans from payday and title lenders at all costs. If you don’t, you may go from “no credit” to “no paycheck” or, even worse, “no car.”

Credit Must Knows: Average Credit Card Debt by income level according to The Federal Reserve

  1. $24,999 a year or less: $3,000 avg credit card debt
  2. $25,000–$44,999 a year: $3,900 avg credit card debt
  3. $45,000–$69,999 a year: $4,900 avg credit card debt
  4. $70,000–$114,999 a year: $5,800 avg credit card debt
  5. $115,000–$159,999 a year: $8,300 avg credit card debt
  6. $160,000 a year or more: $11,200 avg credit card debt

Why does checking credit matter?

It’s important for borrowers to understand credit checks because, generally, each time a lender or financial institution checks your credit, your score is actually lowered. It doesn’t seem fair, does it? You need to borrow money, but to borrow money, a lender checks your credit—which can ding your credit score, making it harder to borrow. What’s up with that?

Many traditional lenders and financial institutions perform what’s called a “hard credit inquiry”—or hard credit check—when they review your credit. This means they’re judging your credit score, >credit report and credit history to determine how risky it will be to lend you money.

So why does a hard credit check hurt your credit?

A number of hard credit checks in a short amount of time is often interpreted as a sign that you’re desperate for money—it may look like you’re either mismanaging the money you have or simply trying to accrue more debt without paying off the money you currently owe. It could make you seem risky—and your credit score is then lowered to reflect that risk.

If you need fast cash, then you’re likely only concerned about getting the money you need now and not letting a bunch of hard credit checks further lower your score. In these cases, a no credit check loan may seem like just what you need. But be careful!

How do No Credit Check Loans work?

So how can you borrow money without a credit check? You might find yourself considering a no credit check loan. A no credit check loan could be one of several different products, and some are safer than others, so you’ll want to do your research before signing any contract.

Many payday loans and title are no credit check loans. This means that the payday or title lender doesn’t perform a hard credit check (or maybe even a soft credit check). They don’t necessarily care about your creditworthiness because they know they’re going to get their money (and then some) back one way or another.

That’s because with a payday or a title loan product, your loan is secured with collateral. In the case of a payday loan, it’s your paycheck. In the case of a title loan, it’s your car title. If you can’t pay back the loan, the lender either cashes and keeps your paycheck or they take possession of your car!

If you’re not interested in losing your paycheck or your car, you’re probably looking for other types of no credit check loans. So, are there options?

Though rarer, there are installment loan products that don’t require a credit check. A no credit check installment loan can assess a borrower’s creditworthiness through means other than a traditional hard credit check.

What does this mean? A no credit check installment loan lender may consider your length of employment, your ability to repay the money you borrow, or other non-traditional criteria.

Borrowing money is a major decision and it should never be made quickly or without an understanding of the loan’s true cost and the impact it may have on your credit.

Credit Cards

Credit Cards
A credit card is a plastic card issued by banks, businesses, and other financial institutions that enables a borrower to make purchases “on credit” and pay for them at a later date.

What is a Credit Card?

A credit card is a modern and convenient way to spend against one’s line of credit provided by a bank or financial institution.

How do Credit Cards work?

Credit cards can be obtained through banks, financial institutions like credit unions, and other businesses. You’re probably used to seeing credit card offers on TV, hearing them on the radio, and receiving them in the mail. They’re everywhere, and most Americans have at least one credit card.[1]

Unlike a debit card, credit cards are not linked to existing funds. When you purchase an item with a credit card, the credit card company covers the cost and you agree to pay them back at a later date. Typically, you can pay off the balance on your card online or through the mail.

Credit card purchases are essentially small, short-term loans. This means that interest will accrue on your purchases. However, many credit card companies offer a grace period, which is a certain amount of time after your purchase before interest will start to accrue. If you pay off the card during a grace period, you’ll avoid paying any interest on your purchases.

The maximum amount you can spend on a credit card will depend on the specific card, the company that issued it, and your credit history. A better credit score will often mean higher credit card limits.[2]

Interest rates and terms

The first term you’ll need to understand in order to grasp credit card interest rates is ‘annual percentage rate (APR)’ which represents the total amount of interest you would pay on a loan in one calendar year. With most loans, the APR includes interest and all other fees associated with borrowing. With credit cards however, there may be multiple APR rates. Here are the most common credit card APRs to watch out for when shopping for a credit card:

Purchase APR: This is the interest rate charged on all purchases made with the credit card. It will most likely be the APR that the credit card company advertises.

Cash advance APR: This is the rate you’ll be charged if you use your credit card to withdraw cash. This rate is typically higher than the purchase APR and comes with no grace period.

Penalty APR: This is the interest that you would be charged if your account becomes delinquent. If you fail to make your payments for a certain amount of time (typically 60 days) then your balance will begin to accrue interest at a higher rate. This is the penalty APR.

Balance transfer APR: If you transfer a balance from one credit card to a new credit card, the interest charged on the new credit card balance is referred to as the balance transfer APR. This rate is usually no higher than the purchase APR.

The APR that you receive will likely be based on how “creditworthy” you are—having a high credit score will result in a lower APR and a higher credit limit. It’s important to note that a bank or financial institution is not allowed to raise or lower your interest rate without notifying you beforehand, unless your account is delinquent.

The good news is that credit cards usually come with a grace period of about 30 days. If you’re able to pay off the balance on your card before the grace period is up, you’ll avoid interest being added. At the end of each month, the credit card company will add the agreed-upon interest to your total balance. This is why it’s always a good idea to pay your credit card balance in full each month.[3]

Some banks or credit card companies will also charge a monthly or annual finance fee. Make sure you find out all the charges associated with a card before you agree to take it.

Types of credit cards

There are several different kinds of credit cards to choose from. Some offer incentives and perks like airline miles or other rewards programs, and some even offer zero percent interest for a certain amount of time after signing up. Below are the most common types of credit cards available to consumers:

Major credit cards: These include the most common types of credit cards such as Visa, Mastercard, American Express, and Discover. Usually, you can get a major credit card through a bank or credit union. Many of them carry certain perks like cash back and rewards programs that allow you to redeem points for gift cards and merchandise. Make sure you do your research, as the interest rate will likely go up after a few months.

Store credit cards: Odds are you’ve been offered a store credit card while checking out at a department store or other business. Many companies will allow you to open a credit card that you can use within their store in order to create brand loyalty. These cards are typically easier to get than a major credit card and may entitle you to certain deals at that particular store.

Secured credit cards: Typically used by consumers with poor credit, a secured credit card will require some sort of collateral to obtain. The borrower will most likely need to put up a cash deposit to get a secured credit card. This deposit may also act as the initial credit limit for the card. Using a secured credit card is a good way to build your credit so you can one day get a regular credit card, assuming you make your payments on time.2

What are the risks and benefits of Credit Cards?

Credit cards can be useful in many situations. Oftentimes they allow consumers to pay for big-ticket items that they don’t have the cash to cover at the time of purchase. As long as you make on-time payments and you’re responsible with your spending, there are several advantages to having and using a credit card.

Although it’s highly recommended to have an emergency savings account, credit cards come in handy for many people experiencing financial setbacks. For instance, if you get into a fender bender and don’t have the $500 to repair your bumper, a credit card might be the next best option.

The perks and rewards programs offered through credit cards are another advantage. Many people accrue thousands of airline miles just for consistently using a certain credit card. In addition, if you know how to take advantage of zero percent APR offers, you may be able to consolidate your credit card debt onto a new card and save money on interest.

However, as beneficial as it may be to use a credit card, there are also risks. The total credit card debt owed by U.S. consumers as of 2016 is $953 billion.[4] One cause of such high credit card debt is surely their accessibility and ease of use.

Credit card offers are everywhere, and many people who don’t have a firm grasp on their finances are still able to get one. In addition, credit cards are very easy to use. Swiping or tapping your card at the checkout is quick and simple, whereas using cash may cause a consumer to think more about their spending choices.

In any instance it can be dangerous to spend money that you don’t have. Credit cards make this easier than ever. It’s always wise when using a credit card to make sure you have the funds to cover every purchase. If you carry a balance on your card by not paying off every purchase right away, you run the risk of accruing an outrageous amount of interest.

Whether you currently have a credit card, or you’re thinking about getting one, make sure to do your homework. Read the terms and conditions for your specific card, know the perks associated with it, and know how much interest you’re paying on all your purchases and cash advances.


  1. “Credit Card” Business Dictionary. Accessed December 5, 2016 from http://www.investopedia.com/terms/s/soft-inquiry
  2. “Credit Card” Investopedia. Accessed December 5, 2016 from https://www.valuepenguin.com/understanding-credit-card-apr-interest-rates
  3. “Understanding Credit Card APRs & Interest Rates.” ValuePenguin. November 28, 2016. Accessed December 5, 2016 from http://www.investopedia.com/terms/s/soft-inquiry
  4. Gonzales, Jamie and Holmes, Tamara. “Credit Card Debt Statistics.” CreditCards.com. Accessed December 5, 2016 http://www.creditcards.com/credit-card-news/credit-card-debt-statistics-1276.php