If you’re concerned that a loan may affect your credit score, you’re not alone. While loans that report to credit bureaus can help you build a positive credit history with on-time payments, there are loan options that don’t report to credit bureaus. Ultimately, whether a lender reports to credit bureaus depends on their policies and procedures, and the nature of your loan agreement.
The following types of loans are ones that often don’t involve reporting to the credit bureaus, but be sure to check with your lender to verify as the following loan types may still involve reporting to credit bureaus.
8 Types of Loans That Don’t Report to Credit Bureaus
- Payday loans. Payday loans are a financing option that lets you borrow a lump sum of money and pay it back in a short amount of time — typically on or before your next payday. These loans are commonly for a few hundred dollars and can be found online and at physical payday lender locations. Payday loans cannot be paid in installments, though many can be rolled over. Apply for these with caution, however, as they typically have the highest APRs out of any credit-bureau-free loan option. Payday loans typically do not report to the credit bureaus.
- Title loans. Title loans are another option that typically do not report to credit bureaus. These short-term, high-interest loans let you use the title of your vehicle as collateral. However, your vehicle can be repossessed if you fail to pay the loan back in time. These are one of the many options available for those with low credit scores or bad credit.
- Personal installment loans. Personal installment loans let you borrow a certain amount of funding and pay it back, potentially with a fixed interest rate on a monthly basis. The repayment terms of these loans generally span a few months to a few years. While the APR may be higher on these loans depending on your credit score, they are generally not as high as payday loans. Some lenders require a valid bank account or checking account for the money to be debited from. Depending on the lender, personal installment loans may or may not report to credit bureaus.
- Personal lines of credit. Personal lines of credit operate similarly to a credit card. You only pay interest on what you borrow, and you can borrow as much or as little as you want up to a certain limit. You can repay what you borrow from a line of credit immediately, or slowly pay it back. Personal lines of credit can be good for building credit history. Depending on the lender, they may report to credit bureaus, so be sure to check in with your provider.
- Cash advance apps. Cash advance apps are relatively new and involve advancing you the money you’ll be getting from your paycheck. The app will then take the money you owe from the paycheck once it’s deposited. This can help if you are in need of funds on short notice. These funding options are managed via online banks and money service providers with no physical branches to walk into. In many cases, cash advance apps don’t report to the credit bureaus.
- Pawn shop loans. Pawning involves taking objects of value, such as jewelry or precious metals, and using them to secure a short-term loan. If you fail to pay the loan back, the item is possessed by the pawn shop and sold to get their money back. These also have short repayment periods, usually as little as 30 days. Pawn shops typically don’t report to the credit bureaus.
- Buy now, pay later. Buy now, pay later providers generally do not report to the credit bureaus. These services give you the option to buy and pay for items in installments over a specific period of time — typically between two weeks and two years. Buy now, pay later companies typically have 0% interest rates if you repay within a short period of time.
- Borrowing from family and friends. Borrowing money from family and friends usually does not involve interest rates, nor does it involve reporting to the credit bureau. However, borrowing too often from family and friends may cause relationship friction or problems in your personal life.
Do No Credit Check Loans Show Up on Your Credit Report When You Apply?
When you apply for a no credit check loan, it may not appear on your credit report, or may only be viewable to you. This is because the lenders either don’t check your credit or they only perform a soft credit check.
When applying for a more traditional loan, lenders will typically perform a hard credit check. These kinds of checks give them access to your full credit report and will be added to it as official inquiries. Hard credit checks can affect your FICO score, especially if too many are made over a short period of time.
Do No Credit Check Loans Show Up on Your Credit Report After You’re Approved?
Whether or not a no credit check loan appears on your credit report depends on if the lender reports to the credit bureaus. These bureaus receive data from lenders that can include your payment history, amount owed and any delinquencies or defaults.
Many lenders who offer no credit check loans do not report to the credit bureaus. This can be good because it means that if you miss payments, the lender won’t send information about them to the bureau. However, it also means that you won’t receive credit for making on-time payments. On-time payments are one of the best ways to build a positive credit history and potentially boost your credit score.
Beware of Defaults
Even if your lender doesn’t report to the credit bureaus, you’ll need to stay on top of your payments. If you miss payments, the lender can send your debt to a collection agency — which will almost always show up on your report. Debt that’s been sent to collections can have a serious negative impact on your credit history.
DISCLAIMER: This content is for informational purposes only, and is not intended as financial, investment, or legal advice. The information herein may contain errors or inaccuracies, and we make no representations or warranties as to its reliability, accuracy, or applicability to your personal situation.
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