Are you aware of your credit score? Even if you are aware, are you happy with the figure? Most of us want to improve our credit scores for various reasons. A high score helps us to save a considerable amount of money when we take a loan. It can also help us in getting hold of our next flat or a car, which we have been eyeing for a long time now. Credit scores stand a chance to be improved, but it takes a lot of time. If you’re in urgent need of money and your score is much less than average or simply very bad, then only a no check credit loan can help you.
A no check credit loan is a type of loan in which the lender is not interested in your credit score before lending you the money. It sounds great, especially when someone is in urgent need of money. The money comes to the borrower without much hassle, and the purpose is solved. But, is this kind of loan as simple as it sounds? You must consider this loan very carefully because there are certain complex aspects associated with these loans. The loan should be the safest money borrowed.
When do you go for a no credit check loan?
Say your credit score is below a limit, which is considered as “subprime.” In Canada, it’s usually below 660. This score can be improved over time, but if you need money right now, you may be in need of a personal loan. The lender decides whether or not he will approve the loan along with interest. The best method to check whether the borrower is creditworthy is by checking his credit score and report. Good credit helps in getting loans approved faster from all kinds of financial institutions. But in case the report is not satisfactory, you will have to look for lenders who do not check your credits or actually offer you no credit check loans.
Are they safe?
There are many kinds of no credit check loans. It can be in the form of a personal installment, a title loan, a payday loan or other types of loans. Some of them are safe and can be availed to meet the emergency financial need. There are others, known as predatory loans, which can trap the borrowers in a vicious cycle of debt for some valuable years of his life.
These loans are offered by both legitimate and predatory money lenders. There are three main differentiating factors between them. They are the ability to repay, rate and term.
Rate: This is the cost of borrowing money expressed as a certain percentage of the principal loan amount charged to a borrower.
Ability to repay: A genuine lender will always check the ability of the borrower to pay back the amount. If they are evaluating you, as a lender, they are definitely genuine. They will look at the banking history, employment details, and the income you have, and then they will decide whether or not to lend you the money. The lenders who show no interest in all these details are actually planning to trap you in high-interest loans that become very difficult to repay, in due course of time. When the borrower is not able to repay, the predatory lender actually rolls them into a new loan with new fees and this time, with collateral.
Term: This is the period of time between the loan getting sanctioned and the repayment of the loan plus the interest. The longer the term, the lower are the payments.
You have to understand all these terms to secure your loan. You can also evaluate the lender on your part, by checking their online customer reviews.
What type of lenders should you avoid?
If you’re a high-risk borrower, there will still be many lenders who would show interest in lending you the money. Most of these lenders would be predatory and are actually trying to take advantage of your situation. A predatory lender will offer loans at very high interest rates or for short terms or both, especially to those who are financially vulnerable. Payday and title lenders, pawn shop brokers and auto title lenders are some of them. The interest rates are high, and the worst part is that there is often a consequence of not being able to pay the money back. Some of these loans also compel the lenders to let go off other valuables, by vicious means.