Posted on February 27, 2010 by Carole Somer

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 man’s 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 penalized 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.