No credit check loans are generally seen as a last resort for borrowers in financial emergencies. The fact that a lender doesn’t run a credit check could potentially be a red flag that their loans are not safe or trustworthy. There are many reasons to check a borrower’s credit history, so beware if a lender isn’t interested in doing so.
A credit check is often an important part of any loan application process. It involves a lender checking your credit score and credit report to see the details of your borrowing/credit history. This can show the lender how trustworthy of a borrower you are, which is often referred to as “creditworthiness.” Without knowing your borrowing history, lenders wouldn’t be able to make an informed decision about whether or not to lend to you.
So why would a lender not want to run a credit check? Even lenders who cater to borrowers with bad credit usually run a credit check. Unfortunately, not checking a borrower’s credit could potentially be a sign that the lender is not very trustworthy. If the lender isn’t checking your credit it may mean that they aren’t very concerned about receiving on-time payments.
If the lender isn’t concerned with being paid on time, it probably means that they make more money through late payments and rollover than they do with on-time payments. The concept is simple: if you make a late payment the lender will probably charge you a fee. These fees can rack up quickly and could end up costing you quite a bit.
They may also rely on a practice called “rollover” to make more money from you. Loan rollover means extending your repayment term. Seems innocent enough right? But by rolling over your loan the lender will also be adding more fees, and you’ll be paying more interest in the long run. Many borrowers who roll over a loan end up doing it several times. This can lead to a lot more money for the lender than if borrowers paid off the loan on time.