Contrary to popular belief, some lenders do offer loans without checking your credit. One best example of this process is a payday loan. They don’t require your credit history and all you need is proof that you have a bank account and a regular income. So, it is easy to find no credit loans in the US? The answer is both yes and no. Loans with bad credit are challenging to find as many lending agencies require a minimum credit score to qualify. In fact, some of the best bad credit personal loans as of March 2020 have been around a starting APR of 7% to 36%. Yes, there are lending firms that specialize in bad credit loans too.
Applying for loans without any credit check is usually called as no credit loans or no-credit-check loans. In this process, if you can’t repay the loan when it is due, you have to renew the loan by paying an additional fee.
45 Million Americans Aim for no Credit Loans
In a study/survey made in 2015, as published on CNBC, it was found that one in every ten American consumers have no credit history. This study was conducted by the Consumer Financial Protection Bureau. The research also found 26 million American adults who have no histories of credit reporting with the top agencies like Equifax, Experian, and TransUnion. This is called invisible credit while the rest of them are outdated and unscorable.
When faced with an emergency, these borrowers aim for no credit loans because it is a much better way to get their job done. They need some cash in an emergency, which could arise from medical expenses, accidents, car problems, household mortgages, or other issues. These are financial crises where there is nothing more alarming than missing a due payment. So, opting for lending agencies where the process is fast and instantaneous is preferred, despite much higher interest rates.
Youngers Prefer Hassle-Free Loans
The main cause of this credit invisibility is the lack of younger adults to participate in credit scoring. More than 80% of 18 and 19-year-olds have no time to establish a credit history. They are more than happy with short-term fast cash loans that go without a credit check. Thus, there is a steady rise in no credit loans in the US in the past years. The trend is visibly drastic in some states than others. This also shows that younger adults are moving away from banks and relying on third-party lending agencies and payday loan agencies which are easier and hassle-free.
- After the CARD Act passed in 2009, consumers under the age 21 have to have a cosigner.
- This move was to keep younger adults from taking loans they can’t repay.
- Prepaid transactions do not help build a credit history, and that contributed as well.
These days all you need is an app that is linked to your salaried account. If you have a regular income and you pay in time, the transaction is good. Most firms allow no credit loans with a starting limit such as $500 or so, to begin with, and based on your record of repaying in time or with a penalty, the limit is increased. But, many firms still have strict credit score eligibility.
There are no credit loans for people without credit history but need money quickly. Building a credit history is a long and time-consuming process and the current generation has been legally and culturally kept away from doing so. Hence, they have moved on and prefer no credit loans for its hassle-free nature.