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How to Get an Installment Loan Without a Credit Check

There are a variety of reasons that borrowers might want to avoid a credit check when they apply for a loan. If your current credit score impacts your ability to seek a low-interest rate, finding a loan without a traditional credit check might be favorable.

If you don’t want your credit report to be littered with credit inquiries, avoiding a hard check is highly recommended. Unfortunately, this topic is more complicated than it appears, so let’s explore ‘no credit check loans’ in more detail.

Where Can I Find No Credit Check Loans?

If you’re looking for a no-credit-check loan, you might be surprised to find out there’s no such thing. A real ‘no credit check loan’ would mean lending indiscriminately—a risky business model for any legitimate lender. All lenders run some form of a credit check on their applicants.

You can find lenders that offer different types of credit checks, though. If you want to avoid a hard credit check on your credit report, it’s essential to find a lender that only runs soft credit checks, for example. Alternatively, if you want a lender to verify your income instead of accessing your credit report, search for a lender that offers this solution.

About Guaranteed Approval Loans

A ‘guaranteed approval loan’ does not exist. While many creative advertisements claim to offer guaranteed loans, you can’t receive an absolute guarantee that you’ll be approved. There are many modern lenders that no longer use traditional forms of credit checks, though.

If you want to increase your chances of approval, you can improve your credit score or find a lender that doesn’t perform credit checks using the three primary credit reporting bodies. Asking a lender about their credit checking process can help you determine if they use the verification methods compatible with your current financial profile.

Three Different Types of Credit Checks

Credit checks are typically referred to as a collective, but there are various types of credit checks. The differences are extremely important to understand if you’re planning on applying for a new personal loan or credit card.

Below, let’s explore the three primary forms of credit checks.

1. Hard Credit Check

A hard credit check is typically considered the traditional form. It is the most thorough and detailed form of a credit check, and it will record a notice on your credit report that indicates that a third party has performed a credit check. It can often lower your credit score.

If a lender says they need to run a credit check, they’re referring to a hard credit check. If you’re looking for a ‘no credit check’ loan, this is the least favorable option of the three available to you.

2. Soft Credit Check

A soft credit check takes a look at your credit file but doesn’t record the inquiry on your report for future reference. Lenders that use this type of credit check help you avoid damaging your report if you’re applying for multiple loans, for example. If you’re denied approval, it won’t lower your credit score.

3. Alternative Credit Check

The alternative credit check doesn’t check your credit file at all. Instead, a lender might verify some other type of financial data, such as your income. It is a common trend in the payday loan industry, but other lenders also offer this type of credit check.

An alternative credit check is not typically used for long-term personal loans. If you’re seeking an alternative credit check loan, it will most likely be for a small amount with a short repayment term.

What Are the Basic Requirements for a Loan?

Requirements for a loan will vary depending on the lender that you choose. Most lenders follow the same core requirements, though. You will need to be over the age of 18 and earning an income of at least $800 per month to qualify.

While this is the bare minimum, you’ll find that many lenders are stricter. They might require you to be over the age of 21, and earning a monthly income of at least $1,200, for example. Many lenders will also have additional income requirements and credit score preferences in their company policies.

It’s always wise to verify your eligibility for a loan before you apply for it on paper. If a lender performs a hard credit check, it’s not worth applying if you won’t qualify.

Improve Your Credit Score

If it’s time to apply for a personal loan, but you’re worried about your credit score, improving it before you apply can increase your chances of approval and lower your interest rate offer. There is a lot of misinformation about the best methods for improving your score, though.

First, you need to know your score before you can improve upon it. If you don’t already have access to your credit score, US law dictates that you’re entitled to check your credit report with all three major reporting bodies for free once a year. Don’t pay to see your report if it’s freely available.

One of the best ways to improve your credit score quickly is to repay your debts. The less of your credit limit you use, the better your credit ranks. Most credit card companies report monthly, so paying off your balances can result in an almost immediate improvement to your score. Opening up another credit card can increase your total credit limit and dilute your utilization percentage—but make sure you don’t run up any balances on your new cards.

Consolidating your balances to a single card can also help you improve your score. Some reporting agencies prefer consolidated balances over numerous balances, for example.

Other than the above recommendations, continue paying all your bills and credit cards on time (or even early). Reliable payment history can help you improve your credit score with meaningful data before you apply for any new loans.

If you’re planning on applying for a loan, make sure to avoid hard credit checks before you submit your application. A hard credit check on your file instantly drops your score and can play havoc on your careful preparations.

Writer

Vivaan Marsh is a professional writer, editor and an expert in personal finance. Her career as a professional writer stretch for over 11 years. One of her passions in life is to help everyday families with there financial problems, making their life a bit easier and explaining complicated topics in an easy way. Read more >

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