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Is "No-Credit-Needed" Engagement Ring Financing Legitimate?

Purchasing an engagement ring is one of the biggest and most important purchases you’ll make in your life. The general rule of thumb on how much you should spend on an engagement ring will vary from one month's salary to three month's salary. However, with nearly 78% of full-time workers living paycheck to paycheck, most people simply don’t have the luxury of purchasing an engagement ring without financing.

While there are a plethora of financing options for engagement ring shoppers with good credit (generally 700 FICO© and up), the options for people with less than stellar credit can be limited. A lot of places (including ourselves) advertise “No Credit Needed” financing. While some might think that sounds too good to be true, there are a handful of legitimate No Credit Needed engagement ring financing options out there.

Before we jump in, we first want to clear the air and help people understand what No Credit Needed financing actually means.

Does No Credit Needed Mean No Credit Check?

No Credit Needed financing generally refers to financing for customers that have below prime credit or no credit history. In these cases, credit score doesn’t play as big a factor in the approval process compared to a traditional lender. However, mostly all No Credit Needed finance companies will still perform a hard credit check in some form* on their applicants.

*Keep in mind that these hard credit checks might not necessarily be done at the three major credit bureaus. Many below prime financing companies will use alternative data providers that also monitor credit inquiries.

Of course, you may ask why a finance company would perform a hard credit check if your FICO© score isn’t a major factor for approval? There are hundreds (if not thousands) of different attributes that go into determining your FICO© score. For consumers that have gone through a rough patch, their FICO© score may not be a good reflection of their recent credit history.

Generally speaking, No Credit Needed finance companies will build their own credit scoring models that take these hundreds of different credit score attributes and derive their own scores that put a stronger weight on recent credit performance. To put it more succinctly, No Credit Needed finance companies are looking for consumers that are trying to build up their credit, which is something that a simple FICO© score would not reflect.

What Are No Credit Needed Finance Companies Looking For?

When evaluating applicants, No Credit Needed financing companies are looking at factors other than traditional FICO© scores. To put it simply, they are looking to see if applicants have the ability to pay back the loan. Some of the major questions that a No Credit Needed finance company will be looking to answer are:

Does the applicant have a steady stream of income?

Typically, finance companies will require at least 3 to 6 months of employment history.

Does the applicant spend responsibly?

Finance companies will want to see checking accounts with positive balances without excessive overdrafts (excessive generally means more than 4 overdrafts in a 30 day period).

Has the applicant been making payments on their obligations recently?

Again, this is tying back to the scoring models discussed in the previous section. Finance companies will look at any recent bankruptcy filings as that is a clear indication that applicants aren’t meeting their obligations.

In addition to verifying the applicant's ability to make payments, finance companies might also enhance credit by requiring a down payment or by directly debiting the customer’s checking account on their pay dates (this ensures the customer has the funds to make the payments).

Be Careful With Lease-To-Own Options

In the engagement ring financing space, one of the most common No Credit Needed financing offers come from lease-to-own companies like Progressive Leasing, Snap Finance, Acima, Zibby, Crest Financial and Future Pay to name a few. The offer will often look something like this:

90-Day Payment option at 0% interest with discounted early buyout after 90 days.

The offer is fairly straightforward: If you pay off your balance within the first 90 days then you pay 0% “interest” (these companies skirt usury laws by charging leasing fees rather than interest). However, if you don’t pay off your balance within the first 90 days then you’ll owe two to three times the original purchase amount (equivalent to a 200% to 300% APR!).

Lease-to-own companies don’t actually finance consumers directly, but instead partner with merchants, whom in turn offer the financing to their customers. Lease-to-own companies only make money if customers don’t pay off their balance in time (and will likely lose money otherwise). The merchant’s sales associate is incentivized to be vague about the leasing terms in order to get the sale. This is obviously a perverse incentive for both parties which can often lead to customers not being fully informed and being shell-shocked when they realize how much they actually owe.

No Credit Needed Financing at Gage Diamonds

At Gage Diamonds we saw an opportunity to provide better financing options for engagement ring shoppers with less-than-stellar credit. Unlike other jewelry stores, we have an exclusive, in-house financing partner. We make our “interest” by sourcing our products at wholesale prices and offering them at competitive retail prices. By partnering directly with our financing partner we can offer true 0% APR financing to our customers, regardless of credit history.

Like other No Credit Needed finance companies, we take an income-based approach to underwriting. We are looking to see if you have a steady stream of income and are responsible with your spending. As long as you have a steady source of income with at least 3 months of history that is directly deposited into a checking account in good standing (no excessive overdrafts or negative balances) than you will have a good chance of getting approved regardless of your credit score.

If you are interested in financing your engagement ring, wedding ring or other fine jewelry, please visit our financing page to learn more and apply. If you have any questions, feel free to reach out to a customer service representative at cs@5050pay.com or by calling 855-440-5050 (M - F, 10am to 6pm CST)