Australians looking for a cash loan may be wondering if they need to have a credit check. The answer is… it depends. There are many lenders out there who will not require a credit check, but there are also some that will. It’s important to know what the requirements are before you apply for a loan, so you can be sure you’re eligible.
Why a Credit Check is a Good Thing for Borrowers
Whenever a credit check is mentioned, people tend to get a bit nervous. After all, your credit score is one of the things that lenders use to determine whether you’re a good risk. But there are actually a few good reasons why you might want to have a credit check done:
- It can help you get a lower interest rate: A good credit score means you’re a low-risk borrower, which means lenders are more likely to offer you a lower interest rate.
- It can help you get a bigger loan: If you have a good credit score, lenders may be more likely to offer you a larger loan amount.
- It can help you get a better loan term: Again, being a low-risk borrower means that lenders may be more willing to offer you a better loan term, such as a longer repayment period.
Furthermore, it can also protect you financially. To answer the question posed in the title, you will find loans that offer no credit check applications, but this isn’t wise because you can borrow beyond your means. Suddenly, you’re spiralling into debt with no way out. Experts will tell you that it’s better to have credit checks because this means that you’re dealing with a responsible lender
Importance of Credit Checks for Lenders
Why do lenders place so much weight on credit checks? It comes down to a few factors and the first is that they need to assess your ability to repay the loan. This includes looking at your current employment situation and income. They’ll also check to see if you have any current debts and whether you’re able to make repayments on time.
When you apply for a loan, the lender knows next to nothing about you. Rather than giving away money to everybody who applies, they need to determine who is high-risk and who isn’t. Fortunately, credit checks give them this information.
As well as telling lenders whether you are a reliable borrower or not, credit checks also help to determine the interest rate you’ll be paying on your loan. The higher the risk, the higher the interest rate will be.
So, if you’re looking to take out a cash loan, the answer is yes – you will need to have a credit check. But don’t worry, providers like Cashify make the process quick and easy. In many cases, you can apply and receive funds on the same day. If you have a good credit score, you’ll notice that your proposed interest rates are lower compared to somebody with a lower score.
Summary
Some borrowers will forgo credit checks altogether to be approved for a loan. However, this comes at a high price – you’ll likely be paying much higher interest rates. Also, you could end up borrowing beyond your means, and this is potentially crippling for your financial future.
If you have a good credit score, you’ll be able to take advantage of lower interest rates. If you’re looking to take out a cash loan, it’s in your best interest to get a credit check first!
