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How Does a No Credit Check Payday Loan Work?

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A no credit check payday loan is a payday loan in which the lender does not check your credit score. There are several benefits associated with a no credit check payday loan. First, if you have bad credit, you can qualify for a no credit payday loan in spite of your low FICO score. Second, if you have relatively good credit, you can keep your credit good by avoiding the inquiries associated with applying for more conventional forms of money such as a credit score or a personal loan. So, regardless of your situation, if you decide that a no credit check payday loan is right for you, it is important to understand exactly how the loan works and what is involved.

How Does a No Credit Check Payday Loan Work?

When you apply for a no credit check payday loan, the lender will ask for several pieces of information. Generally, all lenders will require bank account information. This may come in the form of providing your account number and routing number, or it may come in the form of you writing a check to the payday lender with your bank account information on it. All lenders will require contact information, which generally includes your address and a phone number; some- especially online lenders that don't require faxed information- will require that number be a listed land line number.

Some lenders also require proof of income in the form of pay stubs. This is common for local or in person payday loan lenders. Some online lenders require you to fax in this information, while others, called faxless lenders, don't require the fax but do require more identifying information that can be submitted online.

Because you are providing your bank account information and/or writing a post dated check for the amount of money you borrow, plus fees, lenders do not need to check your credit since they are assured of being paid back. If you don't pay them back on the date due, they can cash the post-dated check you wrote or debit your account to collect the money. As such, your credit is not very important to the lender.

Because your credit is not being checked and because the lender provides the money quickly to you, there is a relatively high cost associated with payday loans. This cost, in the form of an up front fee when you borrow the money, amounts to a relatively high effective annual interest rate- usually several hundred percent. However, if you do not renew the loan- in other words, if you borrow and pay it off within a week or two- the fees are not unreasonable and you can borrow money that you might not otherwise get from any other source due to your bad credit. Therefore, a no credit check payday loan can be a good, albeit somewhat expensive option, if you need a short term loan.

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