Most people know that their credit scores play a leading factor in getting approved for loans. Most loan types require credit checks, and if you do not have good credit, the lender might deny your request for a loan. Are there any loan types that do not require credit checks? People with low credit scores often ask this question when they need to borrow money. If you are in this boat, you might want to look for a payday loan.
What Is a Payday Loan?
If you look around for loans, you will likely find many different types. A payday loan is one type that you might encounter. Payday loans are unique in several ways, especially compared to other types. Payday loans are short-term loans. When you borrow money through this loan type, you must usually repay it within a couple of weeks. In some cases, you can borrow money through these loans for a month or two, but they are always short-term.
Secondly, you cannot usually borrow large amounts of money through payday loans. Instead, they are small loans. You might be able to borrow an amount between $200 and $1,000, for example, but you typically cannot borrow more than $1,000.
Why Do They Not Require Credit Checks?
If getting a payday loan sounds good so far, you might wonder why they do not require credit checks. Lenders that issue these loans know that they are high-risk loans. Therefore, they do not base their decisions on a person's credit. Instead, they might charge fees that are higher than the fees you would pay on other loans.
What Do Lenders Look for When Approving Payday Loan Applications?
While payday loan lenders do not require credit checks, they do require other things. First, they require showing a state-issued ID card to prove your identity. Next, they require proof of income. You must have a job to get a payday loan, and you must show the lender your pay stubs. Finally, payday loan lenders might require references. They ask you to list several names of people you are close to, and they will only contact them if you default on the loan.
How Do You Get One?
If you know that your credit score is poor but are looking for a small loan, you can look for a payday loan lender. You can find payday loan lenders online and in most cities. If you would like to apply for a loan, ask a lender for an application. For more information about no credit score loans, like payday loans, contact a local lender.Share