Loans have existed throughout history without credit checks, with collateral often exchanged for loans. Credit checks are a product of the computer age. Before that a mans word would be his bond, unless he had something of value to provide as collateral. The earliest types of loans recorded were those in ancient Greece and Rome; later they were used as means of financing expeditions and even wars. Pawn broking was the original form of loans and is one of the oldest recorded professions. In fact banking as we know it today evolved from the Italian system of pawn broking.
In modern times however, it makes sense for lenders to establish what kind of credit history a borrower presents, as one with a bad reputation for handling finances isn’t probably the best bet to loan money to. Thus, most personal loans are credit scored and interest rates set accordingly. Even loans which are covered with a large collateral base, such as a house, need to be credit checked by responsible financial institutions.
There is one loan today which is actually sponsored by the federal government which does not require any credit check, and that is a federal student loan. As a person starts their college education they are in many cases too young to have established any kind of credit history. Others may be older with a bad credit history, but they are not penalised for that in the federal student loan system. These are the most reputable loans given today without a credit check. However if a student needs further financial assistance beyond a federal loan they will be unable to obtain a private student loan with no credit check, which is why most private student loans must be endorsed by a co-signer.
The second type of personal loan which requires no credit check is those provided as cash advance pay day loans. Stores touting these loans proliferate in many towns across America, and are widely available on the internet. They are very short term loans, just until the next payday, and no credit check is involved. Not necessarily everyone who uses them has a bad credit history; they may just prefer the ease and speediness of this type of loan rather than waiting for a bank loan to be approved.
The stores which give out payday loans will give immediate approval with no credit checks and nothing recorded with the credit bureaus. They are a short term solution to those who would be unable to find a loan elsewhere, but the charges can be very high, especially if one gets caught in the trap of needing a second payday loan. The payday loan industry is now regulated to prevent loan shark techniques being used, and it is up to the borrower to use them wisely.
Of course there is one other form of loan which requires no credit check and that is the one obtained from the old fashioned pawn broker. If you can actually find a pawn broker still in existence then you will find it is now a regulated business too, and you’ll need proof that Granny’s old heirloom which you’ve arrived to pawn is not in fact stolen merchandise.
The best thing to do is to try and establish a good credit reputation, if for no other reason than in the future any loans will be offered at preferential rates. In the meantime if you are really stuck there are sources of lending out there which really don’t care what your credit is like. Repay these loans on time: the student loans without credit checks will be registered on your credit file. The payday ones won’t register at all, but you can guarantee a date with the debt collectors if you fail to repay them on time.