When applying for a loan, lenders may review your credit. Learn whether it’s possible to get a loan with no credit check.
IN THIS POST, WE COVER:
- Can you get loans with no credit check?
- Why lenders need to check your credit score
- Why you should avoid no credit check loans
- What you’ll need to apply for a loan
Can You Get Loans With No Credit Check?
The short answer is yes, you can get loans with no credit check. These loans are typically designed for borrowers who have poor credit or no credit history and may not qualify for traditional loan options that have a minimum credit score requirement.
No credit check loans can be attractive if you need to borrow money to buy a car or cover an unexpected expense. Instead of relying on your credit score for approval, no credit check loans can use your income, employment history and banking history to qualify you.
Your next question might be, where can I get a loan with no credit check in Canada?
Online lenders are one option, as are payday lenders if you’re looking for a personal loan. If you need a car loan with bad credit, lenders like Birchwood Credit Solutions can help you with getting financing.
Why Lenders Need to Check Your Credit Score
Lenders take a certain amount of risk when making loans. They’re banking on the borrower to repay the loan, with interest and on time. Credit score checks help lenders gauge how risky of a borrower you are.
The stronger your credit score, the more likely you are to repay what you borrow. A low credit score, on the other hand, may hint that you’ve had some trouble managing credit and debt in the past. Lenders might be concerned that if they give you a loan, you may pay late or worse, default.
In Canada, credit scores range from 300 to 900. A score of 741 or better is considered excellent while a score ranging from 690 to 740 would be good. At the other end of the spectrum, poor credit would be a score of 574 or below.
Why You Should Avoid No Credit Check Loans
No credit check loans can be bad news for a couple of reasons. First, they can carry astronomically high interest rates.
Aside from checking your credit score to determine whether to approve you for a loan, lenders also use your score to set your interest rate. Loans with no credit check may have an annual percentage rate in the triple digits, making them extremely expensive.
The other side of the coin is that certain types of no credit check loans can create an endless cycle of debt. Payday loans, for instance, allow you to take an advance against your next paycheck. The catch is that the lender can charge a steep for that convenience, so that when you get paid again, you’re already in the hole trying to pay back the loan and the fee.
The lender may attempt to “help” you by letting you roll the first loan into a new one, with another fee. What you end up with is loan up loan, none of which ever seem to get paid off.
What You’ll Need to Apply for a Loan
Rather than get a loan with no credit check, consider more traditional options for borrowing. When you’re ready to apply for a loan, be sure to bring along these documents:
- Proof of employment
- Recent pay stubs for the last two months
- Recent bank statements for the last two months
- Personal ID
- Proof of residence
If you’re applying for a car loan, you’ll also need to get proof of insurance to complete the sale. And you’ll need the title to your current vehicle if you’re trading it in.
At Birchwood Credit Solutions, we work with borrowers from a variety of different credit backgrounds. We can review your financial situation and credit to help you find a loan option that meets your needs.
Birchwood Credit Solutions is available to help you purchase your next new or used car. Take a moment to fill out our online application today or visit one of our three Winnipeg locations to begin the car-buying process.