Loans are the primary medium to get instant cash at hand. There is some lending institutions and financiers which provide immediate financial assistance to the loan applicants. The loan process keeps evolving with time and as per the requirement of the borrower. Credit score of the individual is considered as a deciding factor for the approval of loan for a long time. Earlier it was impossible for an individual to get loan approval especially when they hold average or bad credit score.
However, looking at the present financial situation of the borrower, most of the people have a bad credit score. And the lenders have lately realised that with the increased demand of such loans in the marketplace that they cannot process without providing a loan to bad credit score holders. Therefore, some lending options are being discovered which offer loan services to people with bad credit score. There are lenders out there who run credit checks but still lend to people with bad credit.
No credit check loan
Such loan process provides the borrower with an opportunity to get loan approval even if they do not possess a good credit score. From a long time, lenders determine the credit score of the borrower to reduce the risk involved in the loan process.
A good credit score ensures the lender that individual has a good credit history and can manage his credit. While good credit score is considered as a sign of less risk involved, the bad credit score reduces the odds of getting approved.
No credit check loan replaces the parameter of analysing risk by the use of collateral. Such loan processes use collateral instead of credit check. To qualify for the no credit check loan process, the borrower needs to use their valuable asset or services which exceed the value of the loan as the collateral.
Since the borrower temporarily holds the collateral, it makes the loan process secured. The lender reserves the right of possessing the collateral in case of loan default ensuring the lender about risk rate.
While the use of collateral secures the loan process, it increases the chances of the borrower with bad credit score to get access to an affordable interest rate along with convenient repayment structure.
Credit check loans
In order to qualify for the traditional loan process which includes banks or credit unions, the borrower is required to hold a good credit score. The credit score is termed as the essential qualifying criteria, and the loan application of borrower with a bad credit score is directly rejected.
In case of credit check loan processes, the borrower with a good credit score is provided with some additional perks including easy access to funding, affordable interest rate and customised repayment structure. Moreover, credit check loan processes are quick and straightforward as they provide the borrower with instant access to cash.
Undoubtedly, credit check and no credit check loan process have a different set of processing structure, but one can make a choice by analysing his requirement.