No Credit Check Debt Consolidation Loans

We often get asked where one can receive a no credit check debt consolidation loan. The short answer is; all lenders perform some kind of credit check. Some check the standard credit report sites like Equifax and TransUnion, and others elect to verify only that one has an income. Keep in mind that some lenders are less risk-averse than others, meaning they will lend to people with worse credit than other lenders. Let’s answer the basic questions about applying for easy approval debt consolidation loans as well as options for those who have bad credit.

Who Can Apply For A New Loan?

The basic requirements do vary from lender to lender. But the main requirements as follows:

  • at least 18 years of age
  • must have a verifiable income

The lender must feel comfortable that the borrower has a way to pay back the loan. The smallest amount that a lender will like to see if $800 per month, although many prefer the borrower to earn at least $2000. That being said, the requirements do vary, and some lenders will be fine with income as low as $1000 per month.

What is Debt Consolidation and a Debt Consolidation Loan?

Let’s say that you have multiple loans, a personal loan, maybe also a credit card with a high interest rate, that all generate both interest and fee’s each month. To reduce the monthly payment of interest rates and fee’s you apply for one new loan where the balance will go to fully pay the other loans. This means that you will have a lower interest rate and fee’s each month as instead of multiple loans you only have one and may help you save money.

How Does Credit Score Affect The Loan Offer

Those with a bad credit score have fewer loan options available to them and always receive higher interest rates if they get approved. While this can be frustrating for those looking for a consolidation loan, many options exist these days for people with bad credit scores.

This is a generalized outline of what one can expect with bad credit. Keep in mind that the current average interest rate for personal loans is around 10.6%.

This will increase as:

  • 550 and above: Many lenders will lend to people with this credit score. Use the pre-approval process to apply for personal loans as soft credit checks do not affect one’s credit score.
  • 480-550: Somewhat low, but there are still lenders who will to individuals at this credit score. The most important factor here is whether or not the individual is financially able to take on another debt. Once again, the use of the pre-approval process is the best bet.
  • 480 and lower: Attempts at the pre-approval process may still be viable as lenders have varying criteria. That being said, this credit score is unlikely to result in a favorable loan, if one at all. It is best to try and improve one’s credit score at this point.

No Credit Check Loans

No credit check loans are loans where no thorough review of one’s credit history is conducted. As stated above, no check loans do not exist. All direct lenders perform some kind of check. At the bare minimum, a lender will verify that the borrower has an income. This type of check is called an alternative credit check.

Alternative checks are most commonly associated with payday loans and other high-interest high fee loans which are not recommended.

There are 3 main types of credit checks one should know about.

  1. Hard Credit Check: This is a thorough review of one’s credit history and financial situation and is conducted after a loan is pre-approved. A hard credit check does have an effect on one’s credit score.
  2. Soft Credit Check: Most commonly used during the pre-approval process or when an individual checks their own credit score. A soft credit check does not have a negative impact on ones credit score.
  3. Alternative Credit Check: In this case, the lender only seeks to verify that one is gainfully employed. This type of check is most commonly associated with payday loans.

Options For Loan With Bad Credit

There are options for those that doesn’t have good credit. There are some things to keep in mind for those individuals with bad credit looking for a consolidation loan. Sometimes one’s credit score is just too poor for lenders. The only solution here is to improve one’s credit score. Let us go over a number of ways to achieve this as well as things to keep in mind.

  • Lowering Credit Utilization Ratio: Creditors do not look solely at credit history, several other components heavily contribute to a lender’s decision to extend credit or not. Credit Utilization Ratio is one of these components. Essentially, the credit utilization ratio measures how much of one’s available credit has been used.
  • Lower Income to Debt (DTI) Ratio: The less money one puts towards their monthly debts to more attractive they will appear to creditors.
  • Applying To More Than One Lender: Soft credit checks do not affect one’s credit. This affords the borrower the luxury of looking around to see what different lenders will offer.
  • Consider Balance Transfers For High-Interest Credit Cards: Many Credit Card companies offer 0% interest rates for 6 to 12 months on transferred balances. Taking ones card with high interest rates, or card with the highest balance and transferring to another card using this type of promotion can help the individual attack the principal amount of the debt, instead of paying interest.
  • Split Loan Into Multiple Loans: Many lenders are not comfortable with lending large sums to individuals with poor credit. Depending on one’s credit score they may be more willing to lend smaller amounts. If someone needs $30,000 to consolidate their debt but is unable to secure $30,000 in credit, applying for two separate loans at $15,000 may yield better results. Important to remember is that this will generate double monthly payments.
  • The Debt Snowball Method: This debt reduction strategy prioritizes paying off the debt with the smallest loan amount first. The minimum payment is made on all other cards, and whatever is left to put towards paying debts is put towards the smallest balance.
  • The Debt Avalanche Method: A more aggressive debt reduction strategy, and works the opposite as the debt snowball method. The debt with the highest interest rate and balance is paid first. When the loan with the highest interest rate is paid in full, you move on to the next which is again, highest.

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