No Credit Check Loans – Loans without a credit score.
This will mean that those consumers with no debt history will have no credit score.
Credit Rating is also known as credit score, and it is an evaluation of the credit risk of a potential borrower to predict their ability to repay the loan. Credit rating evaluates the borrower’s creditworthiness based on history.
As mentioned earlier, a credit score is a statistical tool that relies on the consumer’s credit history. Most lenders specialize in consumers with poor credit score; however, those with no credit score can still obtain loans though terms may be stricter in most cases and there are many lenders specializing in these personal loan types.
Loans with no credit check tend to have short repayment periods. Another critical aspect of these loans is the interest rates charged; they usually have relatively higher interest rates.
Loans without credit score can have an approximate Annual Percentage Rate (APR) of up to 400%.
Five Main Reasons to Avoid No Credit Check
- Loans with no credit check can easily ruin your credit score. These loans can be tempting, but due to their high costs, it is easy for consumers to default which may damage their creditworthiness with future lenders.
- Personal loans with no credit check are costly. The average APR of these loans is 400% which is considered too high.
- These loans are financial quicksand. According to loans statistics, a significant number of borrowers of these loans fail to pay within the set period. They end up borrowing to repay the loan which leads them into a financial mess.
- These type of lenders can be ruthless debt collectors. No credit check loans usually have many tactics of getting to their defaulters, and in most cases, they will be merciless.
- Borrowing no credit check loans is too easy. Unlike bank loans, this type of personal loans does not require extensive paperwork. The loans do not carry a right of recession, so once the borrower takes it, there is no changing of mind.