How applying for financing can affect your credit
When applying for financing, there is a range of ways it can affect your credit: from negatively to not at all.
Primary financing providers (banks, credit card companies, etc.) typically rely on doing a “credit check” when you apply. This is also commonly referred to as a “hard inquiry.” Your potential lender pulls your credit bureau reports to review your credit history and evaluate their risk in loaning you money. Those credit bureaus are notified that a hard inquiry has taken place, and your FICO® score (the credit rating assigned to you that’s used by the majority of reporting agencies and creditors) may drop slightly, even if you end up getting approved.
However, many secondary financing providers (lease-to-own, etc.) don’t rely solely on your credit score to make their decision. They look at other factors to determine your eligibility. This flexibility is what “No Credit Needed” refers to. Your credit history may still be reviewed, but your FICO® score might not reflect a hard inquiry. This isn’t a sure result for all secondary financing applications, as every provider is different. You should speak to a representative before applying if it’s a concern.
Breaking down no credit needed
Put simply, your credit score or history isn’t the main thing that decides your approval or denial. “No Credit Needed” is not a “No Credit Check” guarantee. It is, however, an invitation for those with bad credit or no credit history to apply.
Snap Finance is proud to be a secondary financing provider that welcomes those of all credit backgrounds.
No credit check needs further examination
When you see “No Credit Check” it should cause you to pause and seek clarification. The definition of credit can vary by financing provider. Credit is checked in one way or another during the application process. Each business or financing provider has a different definition and process to check creditworthiness. Ask questions before entering into an agreement with anyone that promises “no credit check.”
You have options
When applying for financing with no credit or a bad credit history, don’t despair. Know that there are trustworthy companies who can help you without getting hung up on your credit score. Understanding the difference between “No Credit Check” and “No Credit Needed” can help you choose a provider you feel comfortable doing business with.
If you’re new to the world of bad credit financing and would like to learn more about the options available to you, check out our Beginner’s guide to financing with bad credit.
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The content of this article is for informational purposes only and should not be construed as personalized legal, financial, or other advice. This article represents paid promotional material provided by or on behalf of Snap Finance, LLC, or its affiliates.