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How to Find a No Credit Check Personal Loan

In the United States, the legal system is built around the philosophy of "innocent until proven guilty." That is, a person is presumed innocent until evidence is produced that explains beyond a shadow of a doubt how that person is guilty of committing a crime. In the world of personal loans however, the opposite is true, and consumers are considered guilty until they are proven innocent. Banks cannot assume that a particular customer is creditworthy enough to trust with their money, so that person must prove his/her "innocence" by submitting to a credit check, which is evidence that the person has a good history of meeting financial obligations.

But what about a person with bad credit who is applying for a personal loan? Certainly, that person doesn't want a credit report pulled, as it is information that is detrimental to the borrower's case when applying for a loan. Even if the customer has every intention of paying off the loan in time and now has the means to really do it, the past credit history is indication that this person is a high risk borrower, and either should not receive a loan, or should be subjected to a higher interest rate to compensate for the additional risk to the bank.

There is another way though, because although rare, there are sources that will offer a no credit check personal loan to people with bad credit nowadays. These can be difficult to find because of banks' penchant for protecting themselves and their assets, but these sources of funds can be vital in a real emergency when an otherwise good person has run into a string of bad luck, and needs some quick cash.

There is one caveat to this loophole in the normal system of applying for personal loans, however. By going for a no credit check personal loan, the applicant is almost admitting that he/she has bad credit, and is resorting to this type of loan because every other option has been eliminated. The idea is this; people with good credit generally don't have a problem holding their own credit records up for scrutiny, if they desire a loan with good repayment terms. So, it is naturally assumed that applicants for personal loans that do not require a credit check are doing so because they feel this information would be a detriment.

Because of this, a no credit check personal loan will usually have a higher interest rate than a personal loan that does require a credit check, to compensate for the added risk to the lender. One way to reduce this risk, and as a result reduce the interest rate on the loan, is to sign over some sort of collateral to the lender, whether it is equity in a house, or the title to a vehicle. That way, the lender can recoup its losses if the loan goes into default. Personal loans of larger amounts will often require collateral anyway, before they are approved. But although they are tougher to find and the interest rates are higher, being able to obtain a no credit check personal loan serves a valuable purpose in the community, allowing people who have had bad financial luck to get their lives back on track again.

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