The basic thing that any company considers while lending money to someone is his repaying ability. Getting back that lent money is the sole purpose of the lenders. But what makes sure that the borrower will return that money? Credit rating bureaus are working that monitor the repaying patterns of the people and as a result, assign them a credit score. These agencies keep an eye on the 5 Cs’ of the credit to determine your credit score. These 5 Cs’ include
- Character (am I candid enough to keep up my promises)
- Capacity (determining if you are able to run the business)
- Capital (do I have enough money to pay back if the borrowed money sinks)
- Collateral (do I have enough security to back up the loan)
- Conditions (is the market situation favorable for my business)
Better the score, better is the repaying capacity and vice versa. But there are some institutes working that do not give any consideration to your credit history and arrange the amount within a day or two for you. While considering installment loan offers, no credit check loans may be an option. What is the purpose of these kinds of installment loan companies? They do so for earning higher interest rates. The interest rates of these institutes are a way higher than the normal lending institutes. While usually the companies charge interest rates that have been approved by the regulatory authorities as seemed to be appropriate. You do not need much to qualify for these types of loans except having a bank account and a pay check. Generally the repayment of no credit check loans is made by monthly installments which are equal in amount.
If we talk about the other party, they will definitely find this type of loan beneficial as they do not have access to traditional loaning options. But they do not know this option is going to be more expensive in the future when they will be paying skyrocketing interest rates. So the main disadvantage of the no credit check installment loans is the high interest rate.
These kinds of loans may appear attractive to you if you are not having a good credit history but they will just increase your problems in the future. If you are considering installment loan offers, there are many other options other than the no credit check loans. Credit unions may be a source of great help for people with poor credit. They facilitate people with bad credit history by offering soft installment terms. There are many credit card options available in the market that are especially designed keeping in mind the needs and capabilities of people having weak credit scores. They require security, offer basic features and are easy to access.
Considering to improving your credit history is a good step to take. Look for the ways to improve your score so that you are able to get loans on usual terms. First thing to do is to start paying your bills on time. Do not spend beyond your means. Take only what you are able to return. Keep some money aside that can be used in urgent situations.