A recent trend in the credit lending industry has been to offer loans with no credit check required. While these loans are not inherently bad for consumers, the types of consumers they tend to attract can be risky. Often targeting those with bad credit, having filed for bankruptcy or ended up in foreclosure, these loans bring false hope to those with additional credit building challenges.
A Word To The Wise
If something seems too good to be true, it usually is. In this case, getting approved for a loan within a matter of minutes, sometimes through an online lender, with bad or damaged credit should be a warning sign. While getting a good credit deal after bankruptcy or a financial setback isn’t impossible, it is something to be take seriously and carefully pursued.
There is a reason why traditional lenders would have denied credit to certain consumers, or at least offered less favorable terms on their accounts. Think about this, why would a lender offer quick and easy money to someone with poor credit or a history of defaulting? Because they protect their loans by carrying steep penalty fees for defaulting, high interest rates, require collateral against the loan or some type of postdated checks to ensure payment. All of these factors can quickly lead to financial disaster if the consumer experiences problems with paying their account. Further, managing these loans once defaulted can be quite complicated and stressful for the consumer.