No-Credit-Check Loans: Alternatives for Borrowing Without Good Credit

No-credit-check loans or bad credit personal loans can sound appealing to borrowers with a checkered repayment history. They offer fast funding when you need it without having to register the good credit score that’s typically required of personal loans.

However, no-credit-check loans should be avoided, if possible. They’re ripe for predatory lending since they come with triple-digit APRs, costly finance fees, limited repayment options and, sometimes, collateral requirements.

Even if no-credit-check loans seem like your only option, let’s review their details, plus alternatives that include so-called bad credit loans from reputable lenders.

What is a no-credit-check loan?

No-credit-check loans — which may be advertised as payday loans or “personal installment loans” — are awarded without regard or, sometimes, in spite of your credit history. Typically lent by online companies charging high interest rates and fees, these loans have fewer eligibility requirements than typical personal loans.

While personal loan lenders determine your eligibility as a borrower based on your credit history, conducting a credit check during the application process, your eligibility for a no-credit-check loan may depend on:

• Whether you’re employed
• How much income you earn
• How you manage your bank account

If a no-credit-check lender sees that you have a recurring direct deposit into your checking account every two weeks, for example, it may approve you to borrow a small amount that could be covered by this regular income. No-credit-check loan marketplace MoneyMutual, for example, requires you to rake in at least $800 per month.

However, no-credit-check loans have far less friendly repayment terms and options than personal loans, including:

• Short repayment periods. No-credit-check loan terms could last days or weeks, whereas legitimate personal loans will have a repayment period of a few years.
• Lump-sum repayment. Personal loans are installment loans, meaning they’re repaid in smaller monthly installments. Payday loans are often disguised as no-credit-check loans that must be repaid in full, plus financing charges, at the end of the shorter repayment period.
• Financing charges. Instead of a typical APR, no-credit-check loans are repaid for a fee. For example, the fee may be $15 per $100 borrowed, so you would pay a $45 fee on a $300 payday loan.
• Rolling over. If you can’t repay a payday loan, you can roll it over into a new payday loan for another fee. This increases the cost of borrowing and can trap you in a cycle of debt you can’t repay.

Here are some examples of no-credit-check lenders and the not-so-appealing terms of products that we do not generally recommend.

Bad credit loan vs. no-credit-check loan

If you feel like you need an emergency loan to get you out of financial trouble, one of the best alternatives to a no-credit-check loan is a bad credit loan. These are personal loans for borrowers with fair credit (which major credit bureau Equifax would define as a credit score between 580 and 669).

Notably, they’re lent by banks and other financial institutions that have long standing reputations, which isn’t usually the case for no-credit-check loans.

Personal loans for bad credit aren’t a perfect solution, either. They’ll still carry higher APRs, in double digits, than loans for borrowers with better credit. Still, if you’re in a bind, need to borrow and have a realistic pathway toward repaying the debt on time or ahead of schedule, you’re much better off with a bad credit loan as opposed to a no-credit-check loan.

Here are examples of lenders that offer personal loans for customers with credit scores in the fair range, at or near 600.

How to qualify for a personal loan with bad credit

Of course, you might be in the market for a no-credit-check loan because your credit score is below 580. That could put personal loans for bad credit out of reach — but not if you have a creditworthy cosigner.

Some lenders and banks may let you apply for a personal loan with a cosigner who can essentially vouch for your ability to repay the loan. This can make it easier to qualify for a personal loan, and you may even qualify for a personal loan with a lower interest rate.

It may be difficult to find a cosigner with good credit who is willing to take on this responsibility, since cosigning on a loan comes with a fair amount of risk. The cosigner is equally responsible for the debt if you don’t repay, which means that both the borrower and cosigner:

• Will have the loan on their credit reports
• Will suffer a credit hit if payments aren’t made
• Can be sued if the debt is not paid

Before you take out a personal loan with a co-borrower, make sure you have a plan in place if you can’t make payments on the loan — but be aware that not all personal loan lenders allow cosigners.

How to avoid predatory lenders for bad or no-credit loans

Before you borrow a personal loan with bad or no credit, consider alternatives first (below). And if you still decide this is a last resort that can’t be avoided, take as much time as you can to shop around for the best possible lender.

You can avoid predatory lenders — and give yourself a better chance of breaking the debt cycle — by asking yourself the questions below. If you can’t answer them confidently, it’s wise to avoid borrowing altogether.

• Interest rate and fees: What is the APR and the finance fee (described above), and how much will this figure add onto the cost of repayment?
• Loan amount and loan term: Can I afford to repay this amount on this term? What is the income schedule I need to maintain to make payments on time, and is that realistic?
• Loan repayment options: Is there a prepayment penalty if I decide to pay off the debt ahead of schedule? If I hit a roadblock during repayment, what recourse does the lender offer? What happens if your personal loan isn’t repaid?
• Lender details: Has this lender been reviewed by companies like LendingTree? What do customers say about this loan and the customer service they received while repaying it?

How to get a bad or no-credit-check loan while avoiding scams

Whether you have good, fair or bad credit, the process of applying for a personal loan is the same. Follow these steps:

1. Check your credit report and score: Review your reports from all three major credit bureaus via AnnualCreditReport.com. If you discover anything amiss, dispute credit report errors to boost your credit score.
2. Prequalify with reputable lenders: By providing some basic information about yourself and your potential loan, lenders can confirm your eligibility and offer rates and terms without performing a hard credit check. Prequalifying with personal loan companies should be prioritized over checking rates and terms on no-credit-check loans.
3. Compare loan quotes (or at least rates and terms): Hopefully, you’ll receive multiple loan offers from reputable lenders. If not, at least compare the APRs, fees and repayment terms listed (sometimes in fine print) on lender websites. Calculate how much it would cost to repay your preferred loan amount with each competing lender, and see which one provides the best overall loan.
4. Choose the best lender for your situation: Complete the more formal application process. For a bad-credit loan, you’ll be subject to a hard credit inquiry and asked to verify personal and financial information you provided during prequalification. For a no-credit-check loan, you may only be asked to upload supporting documents.
5. Sign your final loan documents: Wait to receive your funds, which will be deposited into the checking account that you previously provided to your chosen lender. Once that occurs, you’ll officially enter repayment on the debt, and it’s never too early to make a payment.

If you decide to pursue a no-credit-check loan, be wary of websites that advertise rates and repayment terms that resemble typical personal loans. They could “trap” you with an approval from a third-party lender that charges the high APRs and limited repayment options of payday or no-credit-check loans.

You should also be on the lookout for red flags of potential no-credit-check loan scams:

• Upfront fees — it should always be free to apply for a loan, and never require commitment
• Promises to solve all your financial woes
• Unsolicited contact from unlisted phone numbers or email addresses
• Balloon payments or other fine print that could call for you to repay your debt in lump sums

5 alternatives to no-credit-check loans

It’s best to avoid no-credit-check loans altogether, but that doesn’t mean you can’t find a way to make ends meet without a credit check. If you don’t have time to budget and save up, cut expenses and increase your income, consider alternatives for fast cash without a good credit score:

1. Talk to your employer about a paycheck advance
2. Download a paycheck advance app
3. Borrow against your 401(k)
4. Check your local credit union for loans
5. Borrow from friends or family

1. Talk to your employer about a paycheck advance

Many consumers resort to payday loans and no-credit-check loans as a means of surviving a cash-flow crisis until their paycheck arrives. If this is the case for you, ask your boss or human resources representative about any support it might offer. If you’ve been with your employer for a long time and are on good terms, they might provide a one-time paycheck advance. It doesn’t hurt to ask, though keep in mind that this is a Band-Aid solution that would probably only be granted once.

2. Download a paycheck advance app

Paycheck advance apps like Earnin and Dave let you borrow money from your upcoming paycheck often without charging fees or interest at all. Here’s how it works:

1. Connect the app with the bank where your paychecks are submitted via direct deposit.
2. Verify your pay schedule and hours worked.
3. The app lets you borrow a small amount of money from your next paycheck based on hours you’ve already worked.

These apps are a good alternative to high-interest payday loans, since they often come with little-to-no fees and don’t require a credit check. However, do your research to make sure the app is legitimate. You shouldn’t borrow money without a credit check until you’ve read the fine print.

3. Borrow against your 401(k)

401(k) loans let you borrow from your own retirement account, so they don’t require a credit check.

You can borrow up to $50,000 or half the vested amount, whichever is less. You’ll have up to five years to repay the loan, and payments must be made at least quarterly. The APR is typically the prime rate plus 1%, and your payments including interest are paid back into your 401(k) account.

A 401(k) loan may be a good alternative to other no-credit-check loans, especially if you have sufficient money saved up in your retirement account to cover the cost. However, they’re not always a good option.

Here are a few drawbacks to consider:

  If you can’t repay the loan, you’ll pay income taxes on the amount borrowed, plus a 10% withdrawal penalty if you’re younger than 59½.

  If your employment is terminated, you may be required to repay the loan in full in as little as 90 days.

  You may have to pay fees, such as origination fee, application fee and annual maintenance fees.

  Not all retirement plans allow 401(k) loans.

4. Check your local credit union for loans

Credit unions are nonprofit financial organizations, which means that loan rates may be more competitive than what’s offered by other lenders and banks. Plus, credit unions may be more willing to work with borrowers with less-than-stellar credit who have been members for a certain period of time. However, applying for a personal loan from a credit union still requires a credit check.

For bad-credit borrowers, payday alternative loans (PALs) offered by federal credit unions can be a great alternative to personal loans. These loans were designed to be a safe and affordable alternative to payday loans. You can borrow up to $2,000 depending on the length of the loan, APRs are capped at 28% and application fees have a maximum cost of $20. However, as these types of loans aren’t offered by all credit unions, check with your local branch to review your options.

5. Borrow from friends or family

If you need fast cash without a credit check, you could consider borrowing money from family or friends. Not everyone will have access to this option, but it can be a good way to avoid paying interest and fees if you just need some money to tide you over during a financial emergency.

Before you agree to borrow money from a friend or family member, you should lay out the terms and expectations upfront. Make sure to discuss the loan amount, when it will be repaid and if any interest will be charged. Keep an open line of communication so that your relationship doesn’t suffer as a result of the transaction.

How to improve your credit to avoid predatory loans

The need for a no-credit-check loan disappears if you can establish or rebuild your credit. Try these strategies for the best results, but keep in mind that it could take time to see positive results.

Pay down debt. One of the largest factors affecting your credit score is your credit utilization ratio, which is the amount of credit you have out in your name versus the amount of credit you have available. Your credit utilization ratio should be below 30%, ideally. To the extent that you can, pay down your credit card debt and keep your debt levels low.

Keep making payments on time. Another big factor of your credit score is your payment history. You can do a lot of good by paying everything on time, from your student loans to car loans and any other kinds of outstanding debt.

Apply for a secured credit card or loan. A secured credit card is backed by a deposit you make, and your spending is limited based on how much you deposited. For secured credit-builder loans, you deposit money into an account and borrow against it, and then make payments to the bank.

Have someone add you as an authorized user. If you’re close with someone who has good credit, ask them if they’d be willing to add you as an authorized user to a credit card. You’ll be able to use the card, and the card’s payment history will appear on your credit report.

FAQs about no-credit-check loans

What’s the easiest loan to get?

The easiest loan to get depends on your situation. If you have at least fair credit (a credit score above 580) or a creditworthy cosigner or co-borrower, you might have a relatively easy time being approved for a so-called bad credit personal loan. If you have a poor or thin credit history, however, asking your employer, family or friends for a loan could get you through.

You might also look into paycheck advance mobile apps that don’t charge interest or fees; borrow against your 401(k) retirement plan; or ask your local credit union about its lending options. Those are all great alternatives to no-credit-check loans, including predatory payday loans, which should truly be a last resort.

Can you get a loan without a credit check?

It’s possible to get a loan without a credit check, but it’s likely unwise to borrow in this fashion. That’s because you’ll either be taking out a loan with exorbitant interest and fees that could keep you mired in a debt cycle, or a suspect secured loan, such as a car title loan, which could leave a valuable asset vulnerable if you struggle in repayment.

Can you get a loan without a job?

Even some no-credit-check lenders require employment verification to approve you for a loan. With that said, it’s possible to get a personal loan without a job if you have a creditworthy cosigner or co-applicant who is employed. However, in most cases, as an individual borrower not having employment would make repaying your loan much more difficult, leaving you vulnerable to the serious consequences of missing payments.

What is the minimum credit score for a bad-credit loan?

A minimum credit score of 585 to 600 is needed for a personal loan from a reputable financial institution. Attaching a cosigner or co-borrower with a higher credit score, however, could gain you access to better loan terms. The higher the credit score on your application, the likelier it is you’ll gain approval and access the APRs on the lower end of advertised ranges.

What is the most money you can borrow if you have bad credit?

Reputable lenders of personal loans for bad credit allow customers to borrow as much as $40,000 or $50,000. With that said, the lower your credit score, the lower amount you would likely qualify to borrow. That explains why riskier no-credit-check loans only allow taking out hundreds of dollars or perhaps several thousands of dollars at a time.

What is considered a bad credit score?

The FICO Score model (one of the most commonly-used ones) deems a credit score below 580 as “poor.” To qualify for a so-called bad credit personal loan, however, you’ll very likely need a “fair” credit score of 580 or above. As you check up on your credit report and build your credit score upward, it could be wise to ask prospective lenders about their score requirements, plus what types of credit scores they rely on to make lending decisions.