When you apply for a loan, lenders will check your credit score and credit report to determine how trustworthy you are at paying back your loan. The lower your credit score, the more interest you will pay for the loan. If your score is too low, you may not qualify for the loan at all. In fact, there are different loan approvals at each credit score.
However, a no-credit check loan is a type of loan where a lender does not check your credit score before giving you the loan.
If this seems too good to be true, it’s probably because it is. Read on to learn about all the risks involved with taking a no-credit check loan!
Be Aware of These No-Credit Check Loans Risks
1. No-Credit Check Loans are Notorious for Predators
Lenders who don’t check your credit score before giving out a loan are probably using predatory practices. Nine times out of ten, you’ll be scammed.
Think about it: if a lender doesn’t check your score, it means they don’t care if you pay back the loan. So how does the lender make money if you don’t pay back the loan?
Exorbent interest fees, hidden charges, and late fees.
2. A Cycle of Debt
No-credit check loans are common among payday lenders. These lenders give loans to people they know are unlikely to make payments on time. Payday lenders will then make extra cash because they charge you additional interest and late fees. When this happens, you owe more money, making it harder to make the next payment on time.
In addition to the high fees and interest rates, they force you to make payments on time. The lender may ask you to write post-dated checks that they will cash once the payment is due, or they may force you to give them access to your bank account so they can take out auto-withdrawals when payments are due. If you can’t make payments, they may even make you take out another loan!
It thus turns into a cycle of debt in which the lender continues to make money off of you, and you continue to fall short of paying off the loan. It can be a scary cycle that’s difficult to crawl out of.
3. There are Consequences of Not Making Payments
As mentioned, no-credit check lenders will often force you to make payments on time. If you can’t make those payments, there could be more consequences than just more debt.
For example, say you take out a car title loan, which is sometimes offered as a no-credit check loan. The lender may require you to put your car up for collateral. Therefore, if you can’t make the payments, your vehicle could be repossessed.
Get Credit Help To Get a Trustworthy Loan
In the end, taking out no-credit check loans can be extremely risky. However, that doesn’t fix the fact that you need a loan and don’t have the credit score to get a good one.
So what do you do?
The best way to qualify for a loan is to repair your credit. The best way to repair your credit is with a qualified credit repair company.
The thing is, you could have a bad credit score because there are errors on your report, late payments, derogatories, unpaid debt, or something else. Credit repair companies work to remove those negative items on your report so you can improve your score fast!
Go Clean Credit is one of the top credit score companies in Arizona. They help with all of the issues listed above and so much more! In the end, Go Clean Credit wants your financial dreams to come true, and they want to work with you to help you achieve your goals. Their mission is your success.
So contact Go Clean Credit today for a free consultation and learn how they can help you qualify for trustworthy, risk-free loans!