What You Need to Know About No Credit Check Loan

By Angela Monroe - September 23, 2019

One of the financing options for people with bad credit is No Credit Check Loan. As the name suggests, it allows borrowers to apply for loans without having their credit records scrutinised by lenders. While the credit score is not checked, other requirements are asked from borrowers. These include proof of income, income tax returns and bank statements.

No Credit Check Loan is common among payday loan—a small and short-term financing that is usually paid on the next payday. It can also be an unsecured personal loan, which loans a bigger amount with a longer repayment term than a payday loan.

Features of a No Credit Check Loan 

The amount you can loan is limited

No Credit Check Payday Loan grants a limited amount of fund that’s usually capped around $2,000. Typically, this quick cash is just enough to cover expenses until your next paycheck. The fund is also usually borrowed on a post-dated check that you can cash on your next payday. Hence, this financing is also called Cash Advance or Check Advance Loan.

No Credit Check Personal Loan, meanwhile, provides a bigger amount of around $5,000.

The interest is high while the repayment period is short

Lenders usually charge an impossibly high interest rate from borrowers. It is common for the annual percentage rate of a No Credit Check Loan to exceed 500% or even 1,000%. This is to compensate for the high risk that lenders take in granting the funds despite the possibility of not getting their money back. 

You need to satisfy the loan in a very short period

The average repayment period usually ends around the 15th or 16th day from obtaining the loan, which is typically the same day when you receive your latest pay stub. 

The lenders will not access your credit records

By not factoring in your credit records to your creditworthiness, you will have a bigger chance of getting approved despite terrible credit history.

Your new loan application will still appear on your credit file

Lenders may not check your credit reports, but it doesn’t mean that they will not inform the credit bureaus that you applied for a loan. If you get approved, the new debt will also be added to your files.

You need to have a regular income

Having a regular source of income⁠—whether through regular employment, pension or business⁠—assures lenders that you have the capacity to repay your loan within the agreed repayment period. This can be proven by your latest income tax returns, pay stubs and Centrelink or other pension entitlement documents.

Your banking history will be examined through your latest bank statements. These records can say a lot about your current financial situation, which is essential in assessing your capacity for repayment. Your financial transactions reflect not just the state of your cash flow but also your spending habits and lifestyle. Impressive bank statements have positive cash balance and regular deposits and do not have overdraft for several months prior to the loan application.

Is a No Credit Check Loan Right for Me?

Before taking out this type of loan, consider the following questions:

1. How soon do you need financing?

If the money is vitally serious to aid a desperate situation like hospitalisation of a sick loved one, it may be wise to secure a No Credit Check Loan. Online payday lenders usually grant funds in less than 24 hours as long as you have all the needed documents ready.

No Credit Check Loan also has very few requirements that usually includes bank statements and proofs of income and employment. Preparing these easy-to-obtain requirements helps expedite the processing of your application. 

3. How much do you need?

If you’re short on your budget and only need a meagre amount to cover your daily expenses before the next payday, getting a No Credit Check Loan can help you get through the day. 

Also, the amount you can borrow is limited if you’re a first-time borrower. 

4. Do you have any collateral?

You can get a loan with better terms and lower interest rate if you have a valuable asset, like a real estate property or a vehicle, that you can use to secure the loan. Lenders are more willing to grant you funds if you pledge any collateral because this can be repossessed and sold if you can’t complete the repayment within the agreed term.

On the other hand, a No Credit Check Loan is often the only last hope at financing if you have no valuable assets to pledge as security for the loan.

5. Can you afford the repayment?

Use an online loan calculator to estimate how much you can afford to borrow based on your income. Borrow an amount that is within your salary range to have a higher chance of repayment. If you loan more than what you can afford to repay, interest and all, you may have trouble paying on the due date. You may even default on your loan. 

A No Credit Check Loan already charges a very high interest fee. If you pay late, you could be charged even more.

What Should You Watch Out For?

The astronomically high interest and the short repayment period of a No Credit Check Loan make it very risky. While it can provide immediate relief for cash, it can lead you to more debt if you’re not careful.

Getting Stuck In a Debt Trap

While not factoring in your creditworthiness can help you get financing even with a bad credit record, getting a new debt may not be financially healthy for you.

There are reputable lenders that offer a No Credit Check Loan, but there are also many loan sharks who prey on the desperate situation of bad credit borrowers through this financing option. Loan predators do not assess your credit profile because their main goal is to make money from the loan’s high interest. Thus, if you’re having persistent financial difficulties, the new debt can only make matters worse. For instance, if your financial situation doesn’t improve when your loan repayment is due, you may need to borrow more money or pay another round in fees, putting you deeper into the debt trap.

Further Damage on Your Credit Rating

If you can repay your No Credit Check Loan on time, you can improve your credit score in no time. However, this is not an easy task. The substantial amount that you need for repayment may be difficult to raise or may weigh heavily on your budget. Think about this: You seek a No Credit Check Loan despite the risks it presents because you’re financially unstable. How sure are you that your financial situation improves after receiving the money?

If you default on your loan, your credit rating will plunge further down, worsening your credit records and making it more difficult for you to secure future financing.

Bad Credit Loan as Better Alternative to No Credit Check Loan

A Bad Credit Loan does not put too much value on your credit records. Unlike a No Credit Check Loan, however, it checks your credit records to determine your credit standing. Bad Credit lenders use the information in your credit profile to determine the interest rate and terms of your loan. However, if you have a convincing reason behind a certain negative record, they may give consideration. 

Aside from your credit records, lenders will also need proof of your financial capacity for repayment. These include income tax returns, bank statements, most recent pay stubs. You may also need to provide a down payment. If you can provide collateral or cosigner for your loan, your chances of securing financing increase. These requirements may be more stringent than a No Credit Check Loan, but you will likely get a lower interest rate and more favourable terms.


Loans for People With Bad Credit helps people across Australia secure financing despite their bad credit records. To discuss your options, call 1300 769 384 or fill out our Loan Pre-Approval form.


See also:

What Affects Your Credit Score?

How to Consolidate Your Debt if You Have Bad Credit

What Are Credit Bureaus and How Do They Affect Your Loan Application?

Angela Monroe
Angela Monroe is the Community Manager at The Positive Group, specialising in giving people the information that they need when they need it, and putting you on the path to a fair financial future. She has 8 years of experience in helping Australians find the right finance solutions, and regularly contributes articles to empower Australians with the knowledge they need to become financially healthy.


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