No-Credit-Check Loans: Borrowing Options and Alternatives

No-credit-check loans can have high rates and be difficult to repay. Consider alternatives before you borrow.
Apr 1, 2022

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A no-credit-check loan can seem like the only way to get cash fast if you have a low credit score or no credit history. But this type of loan may come with risks, including triple-digit interest rates and short repayment terms.

Before you borrow, learn why no-credit-check loans can be dangerous, how to evaluate this type of loan, and what safer alternatives may be available to you.

Nerdy tip: An installment loan may be a more affordable way to borrow money. These loans let you borrow the money all at once, then repay it in fixed monthly payments over a period of months or years, instead of weeks. You won’t need to put up collateral, and loan amounts tend to be higher, while interest rates are usually lower. Lenders typically require a credit check to apply, but some specifically offer installment loans for bad credit.

What is a no-credit-check loan?

With a no-credit-check loan, the lender doesn’t review your credit history or credit score when deciding whether to give you a loan. Omitting credit checks is common at payday lenders and other companies that offer high-interest loans.

Your credit history tells a lender how you’ve handled debt in the past and helps them determine how likely you are to repay a new loan. Not knowing your credit history makes the loan risky for the lender, and many no-credit-check lenders balance that risk by charging sky-high annual percentage rates.

These loans are often a few thousand dollars or less and have short repayment terms of a few weeks or months, making them difficult to repay on time and potentially leading the borrower into a cycle of debt.

No-credit-check loan alternatives

If you need fast cash, you may be able to find alternatives to no-credit-check loans, such as local assistance, lending circles or family members.

But a low credit score doesn't have to stand in your way if you want to borrow from a lender with affordable rates and responsible underwriting practices. Here are other loan options for borrowers with bad credit (FICO score of 629 or lower).

Credit union loans

Some credit unions offer small personal loans of $500 or more. To qualify you for a loan, they may consider information other than your credit score, like your history as a member. Many credit unions also have starter credit cards or loans to help you build a credit history. The interest rate charged by federal credit unions is capped at 18%.

Payday alternative loans

Known as PALs, these credit union-issued loans help small-dollar borrowers avoid the debt trap created by traditional payday loans. APRs on these loans are capped at 28%.

Buy now, pay later companies

Buy now, pay later” companies offer to split a purchase into smaller payments over a few weeks or months. BNPL companies don’t usually do a hard credit pull, so approval may be easier than with a traditional loan. BNPL can be helpful for urgent expenses, but use it for one purchase at a time to avoid overspending.

Cash advance apps

Cash advance apps, like Earnin and Dave, let you borrow up to a few hundred dollars from your expected earnings; they usually require repayment on your next payday. Though cash advance apps don’t charge interest, they may require a subscription or fast-funding fee, or they may ask for an optional tip.

Online lenders

Some online lenders consider borrowers with poor credit — even those with FICO scores below 600. To help you qualify, they consider additional data, like employment status and outstanding debts. However, bad-credit loans have higher rates.

A lender that says it doesn’t have a minimum credit score may still review your credit report. Many of the lenders listed below use your credit history to make a loan decision.

Lender

Min. credit score

APR range

Get started

5.0

NerdWallet rating 

560

6.55% - 35.47%

at Upgrade

4.5

NerdWallet rating 

None

5.42% - 35.99%

at Upstart

4.5

NerdWallet rating 

560

8.93% - 35.43%

at Universal Credit

4.0

NerdWallet rating 

None

18.00% - 35.99%

at OneMain

3.0

NerdWallet rating 

None

27.74% - 35.95%

on NerdWallet

None

5.00% - 15.99%

on NerdWallet

No-credit-check loan example

If you have poor credit and take out a one-year, $2,000 loan with a 36% APR — the highest rate an affordable loan can have, according to most consumer advocates — your monthly payment will be $201. That same loan through a no-credit-check lender with an APR of 200% would run you $396 a month — nearly double the cost.

FICO score

Example APR

Monthly payments

Total payments

Excellent (720 or higher)

11%

$177

$2,121

Poor (629 or lower)

36%

$201

$2,411

No-credit-check

200%

$396

$4,746

Are there safe no-credit-check loans?

A no-credit-check lender that reviews at least some of your financial information is a safer choice than one that lends money with no questions asked.

There are online lenders, for example, that review an applicant’s bank account to assess their spending habits, deposits and withdrawals. An account that shows multiple overdrafts may disqualify an applicant.

Other lenders look at reports from alternative credit bureaus that collect information on consumers with low credit scores. These reports can show things like whether you’ve gotten a payday or title loan.

How to shop for no-credit-check loans

If a no-credit-check loan is your best option, here are a few tips to avoid a predatory lender.

  • Look for the APR. Lenders are required by law to disclose the loan’s APR. This number helps you evaluate the loan’s affordability and compare it with other loans. Make sure you see it before signing a loan agreement.

  • Find a lender that assesses your ability to repay. Reviewing your bank account information, checking alternative credit bureaus and requiring proof of income are all signs that a lender wants you to repay the loan. A lender that doesn’t check your ability to repay may be counting on you having to borrow again to pay off the first loan, which is how a debt cycle begins.

  • Understand the repayment terms. Whether you agree to repay the money in two weeks or a few months, know your payment date and how the lender will collect the money. If the lender debits your bank account, review your budget to make sure the money will be there and you won’t overdraw.

  • Ask if the loan is fully amortizing. If the loan requires multiple payments, ask to see the amortization schedule, which is a table that shows how much of each payment goes toward principal and how much to interest. If the loan isn’t fully amortizing, some of your payments may only go to interest without reducing the principal you owe.

  • Look for the lender’s license. The Federal Trade Commission requires lenders to register in all states where they do business. Many list their licenses on their websites.

  • Beware of scammers. A reputable lender won’t ask you to pay them before you get a loan. If the lender asks for a gift card or cash before they lend money, it’s likely a scammer.

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