Credit check

Can you get a personal loan without a credit check?

A credit check may not be necessary to get a personal loan, but it’s important to explore and understand your options. (iStock)

When it comes to managing money, few of us can claim a perfect balance sheet. Whether it’s due to a situation beyond your control, such as job loss or poor judgment, low credit scores do happen and can make it difficult to qualify for a personal loan.

Also, when you’re just starting out and haven’t yet established a credit history, you may find it difficult to secure financing. Since you have not yet proven your ability to repay a loan, lenders cannot assess their risk and may refuse an application.

Personal Loan Opportunities

Whether you have bad credit or no credit, it is possible to get a personal loan without a credit check. One option is a payday loan. With this short-term loan, borrowers get an advance on their salary.


Another option is a title loan, which requires you to use your car title as collateral for the loan. You must own your vehicle to qualify for a title loan, and you can borrow the value of your car. If you are in default, the lender can repossess your car.

Secured credit cards are another option for getting a loan without a credit check. These are best for people who have yet to establish credit. Borrowers are required to provide a security deposit equal to the credit limit.


Additionally, some credit unions or online lenders may consider giving money to borrowers who can provide documentation proving their creditworthiness, such as tax returns, work history, and bank statements.

Disadvantages of getting a loan without a credit check

“Although it can be difficult to get loans with poor credit, it is possible, but it usually comes with a very high interest rate,” said Amy Shepard, financial planning analyst at Sensible Money, LLC, a financial planning company.

The amount borrowed for a typical payday loan ranges from $100 to $500, with fees that can be around $15 per $100. This translates to an annual percentage rate (APR) of 391%. With title loans, lenders often charge an average of 25% per month, with an APR of at least 300%, depending on the Federal Trade Commission.

Plus, the process of getting a new loan will likely cause your credit score to drop, Shepard said. This is not ideal if you are trying to build your credit.

Make your decision

Before committing to a loan that does not require a credit check, make sure you have exhausted all your options and understand the terms. If poor credit was caused by a mistake or one-time situation and ongoing debt isn’t an issue, this approach might be helpful, Shepard said.

“If poor credit is the result of a lot of bad financial decisions and habits, I wouldn’t recommend using a loan to try to improve a credit score,” she said. “In these situations, someone really needs to work on building strong, healthy financial habits rather than trying to use a loan as some kind of band-aid.

“Getting a small loan can help improve poor credit, but only if it’s paid off on time. This attempt to improve a poor credit score only works if someone has taken the time and discipline to to better manage your budget.