Will Quick Loans Affect Your Credit Score?

You may have heard that it is possible to obtain quick loans without a credit check but have you ever been left wondering if these types of loans can affect your credit?

If you’re considering applying for quick loan but the idea of potentially damaging your credit is looming over your head, then this article should help to clear the air on the matter. The last thing that anybody wants is to be considered a loan risk by their bank because of a small error that could have easily been avoided.

How can quick loans affect my credit rating?

Did you know that each new credit request has the potential to lower your credit score? This means that each time you go to a bank seeking a quick loan and they perform a credit check on you, it will have a negative impact on your overall credit rating.

There are two types of credit checks that exist in Canada which can be categorized as soft and hard. A soft check will have no effect on your credit score while a hard check will actually reduce your rating.

A soft check can come in the form of a company doing a quick check because you signed up for their new service and hard check is the one typically performed by your bank when requesting a loan. If you’re looking to obtain a small loan from your bank for emergency reasons, this can be particularly off-putting.

Fortunately, quick loans can be acquired without a credit check from a private institution such as Friendly Lender and these loans will have no negative effect on your credit.

How can you maintain a good credit rating?

Besides avoiding a hard credit check from your bank when seeking a quick loan, here are some other techniques to keep your credit rating up to par and stay in the good graces of your financial institution.

Avoid late payment

It is always highly recommended to pay your bills on time. Not paying your bills on time is majorly frowned up by credit companies and banks won’t make a loan to someone with a credit rating impacted by late payments.

Keep old credit accounts and avoid new ones

The best practice in the eyes of the bank is to not have multiple accounts for the same type of credit. Having an old credit account with consistently good standing is a huge plus in the eyes of anyone making a quick loan.

Keep credit card balance low

The higher the balance on your credit card, the more your credit score will plummet. Try to keep your balance within %30 of your credit card limit to be in good standing.

Keep an eye on your credit reports

Another thing to look out for is errors being made on your credit report. Even if you have an impeccable track record with regards to your credit rating, that doesn’t stop someone else from screwing up and leaving a negative mark on your report by accident. Identity theft and credit card fraud are also very real possibilities that can hurt your credit so be sure to pay attention to your reports.

Summing up

It is important to remember that seeking to acquire a quick loan from your bank will results in a hard credit check that can cause your credit rating to drop. If this worries you, it can be wise to consider obtaining a quick loan without the need for a credit check.

If you have any further questions regarding obtaining a quick loan with no credit check in Canada, do not hesitate to contact the team at Friendly Lender!