No credit check loans are really beneficial especially for those who are unable to maintain a good credit score. If you plan to apply for one, it is important to weigh first its pros and cons. This is to avoid any more conflicts that might hurt your situation financially. Further knowledge about no credit check loans in Canada will also help you during your application — guiding you on what to do and what you should not do to guarantee an approved loan. Read on to learn more about no credit check loans and its pros and cons.
What are no credit check loans in Canada?
If you haven’t built your credit score or you have recently obtained a bad rating, then you can apply for a no credit check loan in Canada in cases that you need to apply for a loan. You can check your score by requesting a credit report from either Equifax, Experian, or TransUnion. For your rating to be good, it should be at least 660. Credit scores are crucial when applying for a traditional loan as it reflects your financial stability and your credit history throughout the years. This is not the case for no credit check loans.
Lenders who offer no credit check loans won’t take into account your credit score, Instead, he or she will require you other documents that can prove your eligibility.
What are the requirements?
Each lender or lending company has different requirements, some demand less while some need more. In Canada, most lenders only approve applicants that are Canadian citizens. They should also meet the minimum age requirement which is above 18 years old. Furthermore, there are companies that only allow those who have a minimum of $1000 monthly income while there are others that do not cap a minimum as long as your salary is consistent. Obviously, these companies will require you the documents that will certify all the information we have mentioned above. A bank account is also mandatory.
Advantages and Disadvantages of No Credit Check Loan
It is important to know the benefits and also risks of what you are getting into. Below are the advantages and disadvantages of applying for no credit check loans.
1. Lenders won’t look into your credit score. The main perk with no credit check loans is that your credit score won’t matter. You do not need to worry about having a bad rating and can immediately proceed with the application. This is beneficial to those who still have to build their credit score.
2. The process is fast. The application process in itself is fast and, not to mention, convenient. Most lenders offer online no credit check application which allows you to apply at home — avoiding the lines and traffic. This is also convenient for people who do not have the extra time to visit the company’s office. It will only take you a couple of steps which starts with filling out the online application form.
3. Approval decisions are released in just a short time. After submitting your application, the company will then send it to multiple lenders. This increases your chance of getting accepted. Decisions will then be issued in just a couple of minutes which further proves who fast no credit check loan application could get. Plus, the likelihood that you are going to get approved is very high, given that you have sufficiently accomplished all requirements.
4. Best for those in need of fast cash. Since the process is guaranteed to require a shorter amount of time compared to traditional loans, no credit check loans are perfect for those who are in dire need of cash as soon as possible — especially for those who only need a small amount.
5. It demands fewer requirements. Compared to traditional loans which require multiple financial statements aside from your credit score, no credit check loans only need basic documents that are usually already in possession by an applicant. These documents, which includes citizenship certificate, government-issued identification, bank account information, and proof of income statement, are evidence of your eligibility for application.
1. The interest rates are higher. To make sure that the lender could avoid risks in granting a loan to a borrower that does not have a credible credit score, he or she will usually hike up the interest rate. Interest rates differ from one lender to another
2. They charge higher costs. It may be convenient time-wise but fees can get a little bit higher. It covers the processing costs and other additional fees.
3. It may be prone to risks and scams. This is more relevant to the online application of no credit check loans. The assurance that the website is secured enough to avoid hackers and identity theft is less. Loan scams caused by fraudulent lenders are also likely.
4. The amount you can borrow is limited. Most no credit check loans can only cap a certain amount. In Canada, borrowers can loan at least $100 up to $1500, which can also depend on the lender. This is unfortunate to those who are in need of larger sums of money.
5. What can I do to get accepted for a no credit check loan in Canada?
Here are some tips that can likely help you increase your chances of getting approved for a credit check loan in Canada.
Conduct your own research
First, find the right lender. You can check online for references about the best lending companies in Canada that offer no credit check loans. You should also look into the different types of no credit check loans that you may qualify for. There are two common types: the payday loan and installment loan. Having sufficient knowledge about these will lead you into the right path.
Talk to your lender
Always consult your lender, especially if you have questions. He or she can also advise you on the type of loan that you should get. Good communication between you and your lender can help the application process become less stressful.
Double-check your requirements
To save time, prepare your documents beforehand. Always check with your lender if there are other requirements needed for your application. In filling out your application form, make sure that you are inputting the right information to avoid errors.