No Credit Loan

Your credit score is the first thing that many financial institutions look at when you want to take out a loan. This credit score is then used as a measuring stick that will indicate to potential lenders how likely you are to pay your loan and not become part of the list of default payers they have. In cases when there is no credit history then the financial institution does not have any credit records on file and resort to what is known as a no credit loan.

A no credit loan is exactly what the name suggests: no credit on file to use as an indicator to supply a loan. Student that are just leaving university and even people who have never seen the need to take out a loan or apply for credit do not have a credit history. This means that they do not have an indicator that tells financial institutions if they should lend them money . How then does anyone get a no credit loan if they do not have a credit score on which to base their credit worthiness?

The first answer to the question above would be to build up credit. This is possible if you open a credit card account and maintain a flawless credit history. Your credit history should show that you are reliable to pay your bills on time. Building up credit will be beneficial when you plan to make major purchases in the future such as buying a house. It will also help to save you from the high interest rates that financial institutions tend to apply to those that have bad credit, no credit or do not wish their credit to be considered as part of the lending transaction. If you are starting from scratch and do not wish to wait to build up your credit, then a no credit loan is possible in the following situations below:

Go To an Institution That Offers Loans With No Credit Checks- There are many institutions that have popped up over the years that are willing to offer a no credit loan. They do not look into the person’s credit history to make a decision and do not hassle the way other financial intuitions hassle borrowers. The advantage with these loans is that they offer the convenience of getting the money you need. The major disadvantage is that you end up paying more than the value of the loan that you borrowed due to the high interest rates that are applied.

PayDay Loan and Cash Advance- Payday loans and cash advance are especially tempting to those that need some extra cash before pay day. A person’s credit score is not taken into consideration to offer this type of no credit loan. The agreement however is a bit tricky and can end up costing someone more that their month’s worth of salary. That is why it is important that this type of no credit loan is carefully analyzed before it is accepted as a solution. There will have to be proof of income on the borrower’s part and a day will be established for him or her to appear at the financial institutions to repay the loan. People with bad credit benefit from a no credit loan, because it saves them from the hassle of having to prove they are credit worthy. If the loan is repaid on time it can be counted as a positive point to their bad credit history and also to build credit for those that do not have any credit history.