No Credit Check Payday Loans – Do You Need a Bad Credit Loan?
While many consumers are turning to payday loans to help with unexpected expenses, the rules about bad credit loans are still relatively lax. In fact, many companies are making the mistake of not even checking the credit of their borrowers.
The reason these companies offering loans are so lenient is that they are not required to check the credit history of their borrowers. If you think this sounds unfair, well it is not. They simply don’t have the resources or personnel to enforce the rules.
What is a Payday Loan?
A payday loan is a loan that is given to someone who has bad credit. Therefore, the only way these companies can ensure that the customer is not a bad credit risk is to not check the credit history of the borrower.
It is surprising that most companies who are charging payday loan customers for a loan consider the credit history of the customer, but they don’t. There is a lot of debate on whether this kind of lending is inherently unfair. Those who believe in fairness would argue that credit checks are important in the lending industry.
No Credit Checks
One of the reasons these lenders allow the customer to take the loan without checking their credit history is that it would be prohibitively expensive to do so. For example, the company would need to run a credit check on each and every customer. This may prove impossible.
So the right answer would be no, the company is not doing anything wrong if they don’t check the credit history of the borrower. However, the company could be doing something wrong. The most important thing to know is that the company is making the loan decision based on your income.
For example, if you take out a payday loan to cover an unexpected medical emergency, it might seem like you have a good chance of paying back the loan. The fact is, it is possible that you will pay back the loan. It is not likely though.
So, what about the times when credit checks are necessary? While the potential consequences of lending money on bad credit could be troublesome, the consequences of not checking the credit history are just as dire. In fact, you are more likely to get the loan if you don’t do a credit check.
There are many examples of this, including many payday loan companies. However, in general, it does not make sense to check the credit history of a potential borrower.
Repaying the Loan on Time
To borrow money is something that many people will do, and most of those people will do it by borrowing loans. The risk of failing to repay the loan, or not paying back the loan on time, does not seem all that bad. What makes it bad is failing to repay the loan on time.
So if you are going to do a credit check before giving out a loan, you should have no problem doing one. That being said, lenders really should have to check the credit history of each and every customer.
Unfortunately, some companies still do not check the credit history of potential borrowers, which leaves many consumers vulnerable to having a bad credit loan. The only way to avoid this is to be sure that the loan company is not charging a higher interest rate for bad credit loans than they would charge a loan on an individual with good credit.