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The concepts of credit history, credit score, and credit checking were initially introduced to protect lenders from losing money due to bad payers. However efficient these financial solutions were in the beginning, they became more and more redundant as markets moved forward. The main reasons proved to be the following:

• If a borrower owns a business and the business becomes a bad payer, this does not necessarily suggest that the borrower himself or herself is not financially trustworthy.

• People tend to behave differently when taking out small loans than they do when taking out large loans. What is more, financial behavior of a client at a certain moment in the past is not illustrative of his or her current behavior.

As a result, financial companies and institutions have developed three major types of no credit loans, when they don’t usually check your credit score upon application submission:

1. Small personal loans – the sum doesn’t justify any credit history check;

2. Payday loans – the duration and the sum borrowed aren’t good reason for a credit check;

3. Online peer-to-peer loans – in this case the competition in this sector led to dropping credit checking during application analysis.

Types of consumers interested in no credit loans

Such loans come with convenient terms and conditions, along with special attractive offers often selected by consumers who are not specifically interested in not having their credit history checked. However, most clients who opt for these offers are either people with bad credit history or people who have had an unpleasant financial situation in the past that they want to keep to themselves. Customers who have previously filed for bankruptcy pay special attention to no credit loans, as they have the opportunity to both get back on track and raise their credit score in the long run. Finally, prospective clients with no credit history trying to build a good credit score right from the beginning also check these offers.

Additional aspects of personal loans involving no credit check

Although some of the elements mentioned below apply solely to certain states, financial companies or banks, they are a good reference for a broad definition of the term:

• They don’t require collateral: you don’t have to own a property or a car to qualify for such a loan.

• They involve no restrictions regarding potential borrowers: your history is left behind as you are given the opportunity to start anew.

• For such personal loans, lenders don’t ask you about the purpose of the money and they actually don’t inquire about this subject; lenders have learned to respect and protect clients’ privacy to the full.

• Payment term negotiation is much more flexible than it is in any other financial context: you get to choose when and how to give the money back, while the limitations are extremely broad.

• Borrowers tend to get approved very fast: if all the papers are in good order, it can virtually be a matter of minutes to get your money.

• They are widely available and can be accessed both online and locally due to the way financial markets has evolved in the recent years.