During periods of financial hardship, it is especially easy for an individual to fall for the temptation of quick payday loans. Indeed, the promise of instant access to cash with seemingly easy repayment terms can definitely be hard to resist when it is rent time, for example, and the landlord is mercilessly knocking on your door. However, as with anything that sounds too good to be true, payday loans have their disadvantages. What happens if you are unable to find financial stability and find yourself in the need of borrowing several numbers in a row?
The first thing you should keep in mind is this: every loan that you apply for goes directly to your credit report. It doesn’t matter if you are successful at paying your debts or not – any future lender whom you go to will be able to see your history of loan applications. For some major creditors, this could indicate that you often struggle with managing your finances. And when the time comes for a bigger-than-usual credit, this is pretty far from the best assumption a lender could make. Of course, there are many reasons why one may not want certain loans of his to be recorded. So, what can you do if you want to take a quick payday loan or two, but you don’t want that written on your credit record?
What are Quick Payday Loans No Credit Check?
For starters, it may be useful to understand what ‘no credit check’, or soft credit check is. There are two types of investigation that a lender or financial institution may perform in order to check an applicant’s credit history. They are known as ‘hard’ check and ‘soft’ check. Hard credit check occurs when a potential lender looks into the borrower’s previous credit score to find out whether he or she is a reliable debtor. Hard inquiries, as this process is also known as, is a detailed look at your history of borrowing and usually stays in your record for up to two years. Banks perform such inquiries for business credit, mortgage loans, automobile loans, or any other type of major credit. Hard credit checks usually lower your credit score, albeit not drastically. However, if you have applied for many loans, as is the case with many people who use quick payday lending, then the potential negative impact of a hard inquiry could be much greater than usual.
Soft credit check, sometimes also called ‘no credit check’, is when an inquiry into your credit history doesn’t affect your credit score at all. These types of check are typically utilized in cases such as credit card re-approval, when an employer wants to asses your financial history, or when you check your own credit report. Unlike hard inquiries, soft credit checks have zero impact on your credit score. And precisely this is the reason why you can find many lenders who promote no credit check quick payday loans for bad credit. However, do not let yourself be mislead by the term ‘no credit check.’ Although there are some exceptions, that term means that most lenders who advertise such service will conduct a soft credit check, or will investigate your credit score by using sources other than the traditional credit bureaus.
How do ‘No Credit Check’ payday loans work?
The fact that there are payday loans companies who offer ‘no credit check’ services doesn’t mean that the applicant is free from providing documentation regarding his financial situation. If you apply for quick payday loan with soft credit history inquiry, you should be ready to give the lender an income statement, or at the very least, a paycheck stub. The lender will then proceed to verify your identity, your financial ability to repay the credit, and your previous borrowing history, if any. If your documentation is legit and everything goes well, the creditor transfers the given sum to your bank account. Although it is definitely not an instant loan, the loan form for no credit check payday loans is usually short and the whole procedure is relatively quick. The borrower might find the money in his bank account by the next day after he was approved for credit.
Apart from the lack of negative consequences on your credit score, there are other advantages of taking out a payday loan with soft credit check. One of them is that any information that you provide will be strictly protected, as long as your lender is reliable. In addition, the creditor will not demand a reason for the loan. In other words, as long as the lender deems you creditworthy and able to pay back your loan, you are good to spend the sum in whatever way you feel is appropriate without having to take into consideration factors such as spending regulations. This may not seem like a big deal, but in fact it could be extremely beneficial for everyone who finds himself in a situation where unexpected expenditures are demanded. As unfortunate as they are, unforeseeable emergencies that may require borrowing such as car accidents, heath incidents that demand medical treatment and bigger-than-usual bills are part of our everyday life and could happen to anybody. And in cases such as the above listed, taking out a quick payday loan with no credit check may turn out to be exactly the thing that gets you out of trouble.
It is important to understand that payday loans with soft credit check have their cons as well. For example, no matter if the inquiry is hard or soft, you still cannot borrow a sum bigger than your income. This means that careful planning is a necessity if you want to avoid getting trapped into a vicious cycle of borrowing and then applying for a new loan in order to repay the previous one. However, if you are willing to dedicate a significant part of your time to preparation, then requesting for a no check credit loan becomes a legit option to explore in times of financial hurdles.