Some lending companies, like Blue Trust Loans, have found that a credit check is not necessarily a reliable indicator of whether a borrower will make timely payments on a loan. Instead, these companies ask for verification of income to make sure the payments for an installment loan will be affordable for this customer. These lenders must charge relatively high interest rates because loans with no credit check are riskier.
A Low Credit Score
What characterizes borrowers who look for these opportunities? Some have experienced trouble with their credit because they ran into financial difficulties. They may have made late payments on credit cards, for example, which can drive a credit score down to fair or even poor. It takes a fairly long time for the credit rating to recover from that damage.
No Credit History
Other men and women have not ever established credit, which means there is no credit history for lenders to check. That can make it almost impossible to get a loan from a bank or credit union, even with income verification. The person may need to establish credit history over six months with a secured credit card or loan. However, that won’t help when a financial crisis arises suddenly.
Considering Income and Budget
Although people tend to want to rush to get money when they have an emergency situation, it’s essential to consider one’s income and budget before taking out an installment loan. The payments must fit into the budget or the financial problems will get even worse. The lending company can see what the income is when the applicant sends check stubs or a copy of a W-2 form, but cannot know what the person’s monthly expenses are.
Making Improvements to One’s Financial Situation
Online installment loans are not intended to be a long-term solution to ongoing financial problems. When used as recommended, the loans can be a significant help for an unexpected expense that must be dealt with quickly. Needing to borrow money for this reason from any source should be taken as a sign that it’s time to devote more attention to one’s financial situation and make improvements.