No Credit Check Loans

One of the qualifications in order to be able to get a loan these days is to have a good credit history. This can be a problem for some people because as time goes by, having a good credit history seems more difficult than ever. But did you know that there are some types of loans that do not require a credit check. One type of loan that does not re quire credit checks is the payday loan.

Credit Checks and Credit History

A credit check is the process which a lender undergoes in order to check the credit history of a consumer who is applying to become a borrower. The credit history is a record of the borrowing and payments of the potential borrower in the past. A low score would indicate that a borrower might have had some trouble handling and paying debts in the past. That would be taken as a sign by the lenders that a person is a high risk borrower.

Each country follows its own system of keeping track of a person’s credit history. In the United States, the System followed is the FICO scoring system is the one that’s followed in order to get the credit score of the individual or the company.

There are five factors that are used in the FICO scaling system. Here are those factors:

    • Payment history
    • Debt
    • Time in file
    • Account Diversity
    • Search for a New Credit

Payment history is the biggest single factor in determining the credit history of the consumer. It makes up 35% of the report. This is the record of how the consumer handled the payment of all past financial obligations. It would show any missed payments, default or debts that were transferred to collections. The most important thing for lenders is to see a regular payment for debts. Overpayments do not much of an impact.

The kind and amount of debt also plays an important part in determining the credit history of the consumer. The most usual type that is measured is revolving debt which refers to the usage of credit cards by the consumer. This makes up 30% of the total credit report. Time in file refers to the age of the file and also the average age of the accounts of the consumer. This makes up 15% of the whole credit score of the individual or the corporation.

It helps to have various types of accounts because Account Diversity makes up 10% of the total score. This is a good indicator to the lender because it is a sign that the consumer has experience in handling different financial products. That’s a sign of financial maturity which means that the person is a low risk borrower.

Search for a new credit refers to the number of inquiries made into the credit history of a consumer. A great number of inquiries mean that the consumer is always out to get some new loan, which in turn could mean that he is always in financial trouble. That’s why it helps to keep inquiries to a minimum. This makes up 10% of the report.

Why Credit Checks Are Important to Lenders

Lenders rely on credit checks as the best means for them in determining whether a particular consumer would turn out to be a low or a high risk borrower. This is not the only thing that lenders check when reviewing the application for cash loans. They would also consider the income of the person and the debt to income ratio. The income of course, is the amount of money that a person is making. The debt to income ratio on the other hand is the amount of money owed by a person when compared with what he or she is earning. A person could be earning a lot, but that would not mean anything if he/she owes a lot.

While credit checks are not the only things used by the lenders, these are still very important and it is one of the main reasons why many borrowers fail to get the money that they need.

No Credit Check Loans

One of the most common types of loan today that does not need any kind of credit check is the payday loan. The payday loan is a short term loan that is taken against the paycheck of an employee. In theory the purpose of this kind of loan is so that a consumer could stay afloat until the arrival of the next paycheck. About a 12 million Americans used this type of loan back 2010 alone and it is assumed that the yearly number has increased since then. One of the major reasons why a great number of people are using payday loans is because it does not require a credit check. Many of those who turn to it, are consumers with bad credit standings who do not have any other choice when it comes to getting a loan.

Characteristics of Payday Loans

Payday loans have other characteristics that make it attractive for many consumers aside from the fact that it does not require a credit check. Another major draw of cash advance loans is the speed of the processing involved. Most payday lenders can process an application within a day. That means a consumer can get the money that he/she is borrowing within 24 hours of application. Some lenders are taking that a step further by guaranteeing that they can process an application in hours.

Then there is the absence of any need for documentation or to send anything through fax. That reduces the amount of trouble involved in applying for a loan. The fact that the application is done online is also a major attraction to many consumers. All that they have to do now is to go online in order to borrow money. With all those characteristics, it is not surprising that millions or Americans are turning to it every year to make up for their financial shortage.

The Dangers of Using Payday Loans

Those qualities of payday loans which are drawing a lot of users each year can be misleading. Those characteristics hide the fact that payday loans can be dangerous for ordinary consumers. The main problem with payday loans is that it encourages being in debt, despite what the ads of the lenders are saying. The whole system of payday lending thrives on making sure that the borrowers stay in debt in perpetuity.

No One Can Afford it

With the kind of interests charged by payday lenders, not even the rich could handle it. The typical APR for a payday loan could be 300% to 400%. What’s worse is that it isn’t the rich who are using these loans but the poor people who do not have enough to pay for the basic necessities.

Rolling Over a Loan

Rolling over a payday loan means extending the terms of the loan, and this would usually mean until the next payday of the borrower. Some might think that this is a good thing for the borrower. In reality, this is what leads to trouble for most people who use online payday loans. This is because it encourages being constantly in debt.

You Might Keep on Borrowing

Another issue with payday loans is that it could become a habit. The ease of getting money could overshadow the fact that this kind of loan is very expensive. This is what’s causing many consumers to become habitual borrowers of payday loans. What’s even more alarming is that payday lenders are encouraging the behaviour because they can make more money from people who borrow more often.

It Can Ruin Your Credit

One irony about payday loans is that while it does not require a credit check, taking out one could ruin your credit standing. This is the kind of loan that will not look good on your credit report. When lenders see that you have used payday loans in the past, they would think that you were in very desperate financial circumstances. If you want to build up your credit, then stay away from this loan.

It Can Cause You to Make Worse Moves

There are actually worse things that you can do over taking out a payday loan. One such move would be to close your bank account in the hopes that the lenders would not have access to your money and that they would just quit. That would be wishful thinking because lenders would go to great lengths to make sure that you pay them back.

Using No Credit Check Payday Loans

If you have a bad credit should you resort to the use of payday loans to meet your financial needs? That would depend on your situation and how well you understand what payday loans would entail. If you know that you need to pay it back as soon as you can and you are only planning on using it for an emergency financial need, then there’s no problem in using it.

Refernces:
http://en.wikipedia.org/wiki/Credit_history
http://www.rdw-bg.org/why-payday-loans-are-dangerous.php
http://www.pewstates.org/uploadedFiles/PCS_Assets/2012/Pew_Payday_Lending_Report.pdf

Mortgage loans and best rates

Apparently most of us are interested in most favorable treatment when it comes to any major purchase. What we lack is awareness how things have changed in recent years and how demanding lenders have become due to a collapsed housing market, notorious defaults and unstable employment conditions. The economy is picking up slowly but banks prefer not to face yet another crisis, keeping also in mind that millions of Americans own houses now which are worth less than they had bought them for. A risk of foreclosure is all time high so any prospective borrower faces a scrupulous review with the emphasis on one’s credit rating, credit score, job and generated income and a down payment.

Mortgage loans and best rates are possible mostly for those with an impeccable credit score which is situated somewhere in the excellent category or at least very good, which means around 680 points. A score above 700 is indeed the pointer in the right direction. How is it determined? By taking into account all the borrower’s previous and current obligations, payments and incurred debts that demand prompt attention. If halted for some unexpected reasons, be sure that will leave a significant mark on your credit rating, effectively pushing your score down. Things can always be repaired as you bounce back and push through during the difficult times to land on the right track again making payments as a responsible customer you have come to be expected.

Paying the Price

The urges and impulse shopping are hard in nature to manage for obvious reasons; an impulse is what just happens unlike perseverance; it is similar to grabbing a cookie when you can and not later as in delayed gratification experiments. Succumbing to any of this with the frequent use of credit cards on a daily basis and the successive failure to settle things on time are a bomb slowly ticking away about to go off and mar your score. If you are faced with that scenario, previously unable to hold your horses, now you will need to use a tighter rein on yourself before you can enjoy what has been your dream for a long time.

Shopping for Best Rates

If the above is not applicable to your particular case, chances are you could be contemplating several quotes from lenders after applying for prequalification. If that move is not convincing somehow there is always an option of hiring a broker to do the job for you instead at a fee, which will obviously help you save time and some headache. Alternatively, you could do both to see if the broker’s thinking matches your own as long you do not mind applying some basic math skills to calculate the costs and have some dollars to spare on the experiment. After all that is a decision that will markedly affect your and your family’s life.

Finding the Best Pay Day Loan Company

As the time goes by a list of expenses is getting longer than ever with prices skyrocketing. If you want to keep up with what’s going on, then you have to face those expenses. It might be a problem when your income falls short of what you need.

Solutions to Cash Problems

There are many ways for your main income to be supplemented. You can take on an additional job. You can also ask for a raise or maybe find a higher paying job. Those are long term solutions to a cash problem. It would not help much if you needed the money right away. What you need in situations like that is a fast and speedy solution. When you are thinking of getting a fast loan nothing would be faster than money from a lender.

Short Term Loan Qualities

A cash advance loan is a short term loan. It is marketed as a means of helping consumers like you to go through sudden cash shortages. There are several key qualities of a short term loan that you should take note of. We have listed here some of the qualities that make it more useful for potential users like you.

  • Fast processing
  • Convenient application
  • Few requirements
  • No documentation or faxing
  • No credit checks and teletrack

Best Pay Day Loan Company

With all of these qualities, an instant payday loan really seems like an ideal solution for most of your sudden cash needs. There is an abundance of companies offering them right now, that the problem would actually to find the right company to borrow from. It is a must for you to find a legitimate direct lender if you want to be sure that what you are getting is the best deal.

How To Find the Best Lender

First of all, you need to check how long a company has been operating. If they have only been in existence for a few months, that’s not really the best sign. Look for a company that has been operating for a couple of years already. Also check if there have been any complaints against that company.

Be Careful Even with Legit Lenders

Experts are warning though that even when you are dealing with a reputable lender, you would still be getting a raw deal. This is mainly due to the fact that the interest that they are charging is way higher than what you can get from other financial products. When you can get the APR for many payday loans it could make the owed amount double in a very short time.

Then there is the fact that there is little regulation for this kind of lending in the majority of the states. That means lenders have a free hand as to what they can do and what they want to charge. If you are not careful, it could pose more problems for you.