Some credit cards are offered without the need for a credit check. This is quite unusual, and it’s become even more unusual since the global financial crisis and its accompanying credit crunch. However some cards still are available without a credit check. One myth regarding cards without credit checks is that they do not reflect on a person’s credit record, through an erroneous belief that the issuing bank or financial institution isn’t tied to the major credit reporting agencies. This myth can be quite dangerous if a person applies for a number of credit cards in a short period of time, as all those applications, whether accepted or refused, will lower the applicant’s credit score. All credit cards are reported to the agencies and contribute to the card holder’s credit score.
Credit Card Application with No Credit Check?
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Some cards advertise an application decision within seconds. This means the credit card company performs a less thorough form of credit check, rather than no credit check at all, which is not the same thing although it does make it more likely the credit card will be approved. There is a common misconception that store cards do not perform credit checks. While this used to be true, most store cards now run a very basic credit check before issuing a card. As with the quick decision credit cards, this can increase the chance of approval, but it does not mean that no credit check is carried out.
There are some credit cards in Australia, including secured credit cards, which advertise themselves as open to all applicants. However, this is no guarantee a credit check will not be performed. In many cases the check will be run and the interest rate adjusted for applicants with a poor credit history. In the case of credit cards open to people with really bad credit records, more questions may be asked about the applicant’s credit history rather than fewer, however this may still be the best option for Australians looking for ‘no credit check cards’. This is because the issuing financial institution, which faces a large risk of default, believes a credit score does not provide enough information for them to accurately assess their level of risk, which in turn generally determines the interest rate charged. Prepaid credit cards do not run credit checks, but nor do they lend money. Instead they merely allow a person to use the credit card processing system to pay for goods either at a shop or over the internet.