Alternatives to no credit check loans

You’re in a rough patch and could really appreciate another couple hundred or so to tide you over. Sadly, your credit score isn’t faring as well as you’d like and most conventional loan options are closed to you. 

No credit check loans are heavily advertised but being a discerning borrower you’re fully aware of the numerous pitfalls such loans come with, and wouldn’t be caught within a mile of such shady dealings. And wisely so, for there’s still a plethora of safer and more favourable options available to you. Fret not, for we’ll be taking a look at the choices open to someone who isn’t in an advantageous position to disclose his credit score.

Social Lending/Peer-to-peer (P2P) Lending

Far from being a new concept but one that’s seen a great resurgence in recent popularity, P2P lending is a form of micro-financing. It essentially comprises the same loan system that we’re familiar with but with the omission of the bank entirely. Banks and financial institutions do have their place in society, but there are situations when their absence can be much appreciated. Cutting out the middleman puts lenders and borrowers in direct contact with each other. This translates to much more flexible and personalized negotiations being put on the table in addition to not having to deal with the usual stifling red tape and administrative fees. 

How it usually works is that there’ll be a consolidated system or platform for lenders and borrowers to view and interact with each other. Both parties can post terms and arrangements that they’re comfortable with accepting and respond to posts that appeal to them. A single person on the Internet deals with much less overhead than a bank does, and for this reason P2P lenders can offer much more favourable rates and schemes. In fact, if your posted terms sound good to enough people, it’s not uncommon to have lenders bidding for your offer on the system, and they’ll one-up the competition by offering better rates for you.

Because you’ll be dealing with a person as an individual instead of an entire organization, P2P loans are much more flexible when it comes to what options are up for discussion. Depending on what the lender is comfortable with, loans can be secured or unsecured, short or long in duration, and most pertinent to our situation, credit checks can be required or omitted. Ultimately, it all boils down to what the lender is comfortable with. The beauty of the system is that if this lender isn’t receptive to your proposed terms, there’s plenty more you can try your luck with. 

Granted, there’s many benefits in store for those who can capitalize on it, but it’s not all sunshine and rainbows either. Business is business, and people will be out to make the best deals they can with every transaction. While the P2P lending system offers much more options to those with poor credit scores than banks do, do acknowledge that you’ll still be a less desirable option. Loaning to someone who doesn’t have the means to prove that he is able to complete repayment is a pretty large risk, and if the situation was reversed you’d be pretty wary too. So while there is a lot more breathing room for you to work with as compared to conventional loans offered by a bank, do realize all the same that there are limitations you have to work with and that those with better credit scores will naturally secure better deals.

Still, it’s a much more reliable system than no credit check or payday loans. And at the very least there’s the possibility of negotiations available, as compared to a straight veto should you approach a bank with the same credit score.

Loans from Friends/Family

What next if P2P lending isn’t working out for you? Who next can you turn to? Well, if individuals are more flexible than banks, naturally individuals close to you are even more flexible than strangers you meet over an online system. Yes, there may come a time when you find yourself having to borrow from those close to you. It’s a tricky and awkward situation at best, but there are steps we can take to make the process easier.

It’s important not to let emotional attachment get in the way of transactions, even if the other party is good natured and receptive, it is only right to ensure a fair deal for both parties. When close friends and family are concerned, a loan is not just monetary but bears an emotional component as well. It’s wisest to have open communication and negotiations in place, and appropriate discussions about fail safes should there be issues with repayment. While money is an important component of life, it’d be a shame if interpersonal relationships were to suffer due to loaning disputes.

To that end, during negotiations both parties should work out a deal that’s mutually favourable and reasonable for both lender and borrower. The lender should not be coerced into lending more than he is comfortable with and should receive a reasonable interest corresponding to the funds he is putting up. In the same vein, the agreed interest and loan period should be fair and reasonable to the borrower as well. It is up to both parties to voice their concerns and terms openly during the negotiation process and come to constructive mutual compromise. Be as open and as frank as you need to be to avoid misunderstandings.

Some people will feel more comfortable with official documentation stipulating the terms of the agreed loan, especially if it’s a sizable amount of funds. This is a wise move for both parties as it keeps arrangements fair and transparent and will go a long way in clearing disputes should they regrettably occur. Have a reputable attorney prepare the appropriate documents just like a bank would, being sure to spell out the terms of the loan, secure the lender’s interest and have provisions in place for foreseeable issues such as late or defaulted payments. Also make sure that the legal document is cogent with your state’s laws.

In any case, should you need to loan from a friend or family member, always remember the emotional component and be respectful and open during the whole process.

Government Loans

Virtually every state and county will have some form of government assisted loan or scheme available. It won’t hurt to check in at your local administration office to inquire about what loans you might be eligible for, who knows, you might be pleasantly surprised. 

The most common loans offered include education, housing and small-time business loans. Do check if you qualify for any of these as their terms tend to be pretty reasonable and will definitely go a long way towards your endeavors.

Rebuilding Your Credit Score

Finally, it may seem a moot point but prevention is always better than cure. It’s always in your best interests to take whatever steps you can to improve your credit score as early as possible. 

Responsible usage of secured credit cards, cosigners and retailer programs will positively contribute to your track record. It is no doubt a gradual and difficult process but eventually you’ll be able to borrow at much more reasonable rates with far more loan options available to you. The time and effort invested will be worth it.

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