Finance

Does “No Credit Check” Installment Loans Exist?

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To be sincere, the answer is NO. You have probably seen installment loans hyped as a source of quick cash with an easy loan application process with no credit check. But while the name implies guaranteed loans, that’s not exactly how it works.

When lenders say “guaranteed approval,” they mean they are offering you instant decisions. Although they do not run a hard credit check with traditional credit bureaus, at the very least, most lenders need to be sure you have a source of income before lending you money, and they will offer you an instant decision regarding your approval status within minutes of applying.

What Are Hard Credit Checks?

While soft credit checks can occur without your knowledge, hard credit checks commonly happen when you apply for a mortgage, credit card, or loan, and you have to authorize it before it can be done. Hard credit checks are done by creditors to review your credit history and decide if you’re eligible before granting or disapproving a loan.

Hard credit checks remain on your credit report for two years, and they lower your credit score by a few points, though that shouldn’t be a problem in the long run. However, too many hard credit checks in a short period can give lenders the impression that you might be a higher risk customer.

What Are Soft Credit Checks?

This type of credit check might be the best option for you if you don’t want your loan application to reduce your credit score, or if you have a credit score that is below average. Soft credit check occurs when a company checks your credit history, as part of a background check. For instance, when a credit card issuer checks your credit history without your consent to see if you qualify for certain credit card offers. Unlike hard credit checks that do not decrease your credit score, and it may or may not be recorded in your credit report.

Soft credit loan checks also serve as a fast means of getting an urgent loan if you’re in a tight corner. For instance, if your car suddenly breaks down, and you need to repair it instantly, you may not have enough time to wait for seven to ten days before the credit bureau can make a loan decision.

Can Proclaimed “No Credit Check” Online Installment Loans Be Predatory?

Unfortunately, this can be true in some situations. Many soft credit loans in the market today are predatory, and more or less a trap, particularly set for people with a bad credit report. They know that these set of people are desperate and won’t refuse a loan. So, this might be a trap to put a person into an endless cycle of debts with extremely high interest and default rates.

However, soft credit check loans that are non-predatory and owned by licensed providers also exist. So, be sure to carry out thorough research and ask questions until you are sure you understand what you’re getting into before applying for a soft check loan.

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