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Do personal loans affect your credit score?

Do personal loans affect your credit score?

Finally, one of the oldest types of lenders is the peer-to-peer or P2P lender. Originating in England and working its way to the U.S. in the early 2000s, P2P lending allows individual investors to fund personal loans and collect the interest as their return.

While there is still a formal application process to go through, these lenders have opened the doors to greater access to credit for those with lower credit scores. And if you have good credit, you get to take advantage of low interest rates and flexible repayment terms.

Applying for Personal Loans Online

Lenders who operate online make it easy for borrowers to get offers within minutes of entering a few pieces of basic information. There are typically two types of online applications: the pre-approval process and the formal application.


Many lenders allow you to check your personal loan offer through the pre-approval process without performing a hard inquiry. This lets you find out what kind of interest rates and monthly payments you can expect so you can compare offers without getting a hard credit inquiry on your credit report.