62% of the American population has less than $1000.00 in savings. Over 20% don’t even have savings accounts.
Those statistics shed light on the importance of loans. Loans give people the opportunity to get the money they need quickly in order to manage the financial problems they’re facing.
But what if you have bad or no credit? Is there such thing as bad or no credit loans?
Our team at Bonsai Finance has put together this article to educate consumers on what their options are if they’re in need of a loan but don’t have a positive credit history.
How to Get Approved for No Credit Loans
Getting approved for a loan if you have no credit or bad credit can be a numbers game. What we mean by that is it’s important to request a loan from a variety of lenders to improve your chances of having your loan funded.
The reason why having a positive credit history is important when looking for a loan is because your credit score gives lenders a snapshot of what the odds are of you paying your loan back.
The importance of credit scores in lending decisions can be an unfortunate reality given that many people have damaged or no credit through no fault of their own.
Maybe you were making payments on a loan in the past and lost your job. Maybe you just turned 18 and haven’t had the opportunity to establish your credit.
Whatever your circumstance, no credit loans are available to give you options when you need money.
What Should I Be Aware of When Taking out a No Credit Loan
The primary thing you should be aware of when seeking a no credit loan are the terms of the loan product you’re accepting. In order for lenders to mitigate the risk of giving money to someone with bad or no credit, it’s likely you’ll get less favorable terms with no credit loans than with one you’d get offered if you had positive credit.
Look at the interest rate you’re expected to pay before accepting a loan. Your interest percentage will give you a picture of how much you’ll be paying in excess of the amount you’re borrowing.
Also be sure to understand any fees such as “initiation fees” your loan requires.
Going through the loan product you’re taking on thoroughly prior to accepting will help ensure your ability to repay it.
Look for Soft Credit Inquires as Opposed to Hard Ones
Borrowers with no credit have a higher likelihood of being rejected for a loan. Because of that, they may need to fill out multiple loan requests.
When requesting multiple loans, it’s important to understand the type of credit inquiry that gets conducted to determine your loan eligibility.
There are two types of credit inquiries. Soft inquiries (or soft pulls) and hard inquiries (or hard pulls).
With a soft inquiry, lenders look at topical information in regard to your creditworthiness. This type of inquiry will not damage your credit score.
A hard inquiry gives lenders a more comprehensive look at your credit history. These types of inquiries can give information about the loans you’ve been approved or denied for in the past. It will also disclose the number of loans you have requested, repayment history and more.
These hard inquiries do have an effect on your credit. Consequently, you should understand prior to filling out loan requests which type of inquiry will be performed.
Why No Credit Loans Can Be Beneficial to You
Beyond the obvious benefit of getting the money you need, no credit loans can have a positive impact on your borrowing future.
No credit loans are often referred to as “credit builder loans”. These loans offer people the opportunity to prove themselves as responsible borrowers to lenders.
Even though no credit loans may not have excellent terms, if you take one out it will give you the opportunity to rebuild your credit score. After responsibly managing a few no credit loans, you will likely find that your eligibility for better loans will improve.
Where You Can Find No Credit Loans
No credit loans can be found through a number of lending institutions. Some popular places to get matched with these loan products are through credit unions, community banks or for the most ease and options – online.
Our group at Bonsai Finance specializes in connecting people looking for loans to a variety of reputable lenders online. Our service gives you the opportunity to compare and contrast loan terms and pick the best loan product for your individual needs.
Summarizing No Credit Loans and How Bonsai Finance Can Help You Find the Right One
Loans are an important tool millions of people all over the world turn to every year. Loans can be used to deal with financial hardships or even to fund a holiday you and your family have been wanting to go on.
If you have bad or no credit, there are loan products available to you. To improve your chances of getting matched with a loan, it’s important to request loans from as many lenders as possible.
Also, stay mindful of the impact these requests could have on your credit score (ex: via a hard credit inquiry).
If you’re looking to get connected with a number of reputable lenders today, Bonsai Finance can help.
Bonsai Finance has been connecting people to the money they need for years. Our network of lenders provide competitive terms to borrowers and can fund loans quickly!
To get started requesting a loan and finding a product that meets your needs, fill out our online request form.
For more general information on loans, read more on our blog.