Jenny wants to know if it’s okay to get payday loans online no credit check:
“I’m a mother of two and I have a bad credit because I couldn’t pay up my past debts when I lost my job seven months ago. I’m still coping to pay up my loans (I’m not irresponsible enough to run away from loans). But since I’m living from paycheck to paycheck now, I need to borrow occasionally to cover the current months’ budget while I repay my past loans. I thought that I’d be better off if I can borrow from lenders that don’t check on my financial record because this will mean faster processing and guaranteed approval. However, I’m having second thoughts considering some stories that I hear about this type of loans. Would you recommend these loans to someone like me?”
– Jenny, 41
Payday loans online no credit check are practical, indeed. But we have to change the question a bit to give a better answer: When do I need to get payday loans online no credit check?
These type of loans are often used for emergencies and they are paid within a payday period. The popularity of payday loans online no credit check can be traced to the credit crunch or the period when many people started to default on their credit and they borrowed from banks and mainstream financial institutions. When banks started to shun away borrowers because of poor credit scores, payday loans online no credit check seemed a good option.
So how come payday loans are available when banks wouldn’t give out credit to these people? A huge caveat: loans are for small amounts while the interest rates and penalties are high and more severe because of the risks lenders face with borrowers who have defaulted in the past.
Lenders of payday loans online no credit check work on the model of volume business. They get as much borrowers as they can and they really don’t expect that all borrowers can pay back. Which brings us back to Jenny’s question. If payday loans online sound tempting, you should think again, because the Teletrack system that tracks your credit history is there for a good reason.
What is Teletrack?
It’s an industry-wide system that allows financial institutions, banks and lenders to see your credit performance. When you make a loan or payment, that record is put by the lender in a Teletrack system that says you’ve made that loan or payment. Teletrack systems are offered by private third-party providers like this company. The industry-wide system allows banks, lenders and you yourself to check on your credit score (read more on this in this online loans no credit check article). Over time, your Teletrack record profiles your loan and payment performance, and this is what banks and mainstream lenders check to approve or decline your loan application. It goes without saying that lenders of payday loans online no credit check do not check your Teletrack. Sounds good? Not really.
Check and balance
Teletrack acts like a check-and-balance peg for both lenders and borrowers. For lenders, it gives them a clue if you’re a high- or low-risk borrower. Teletrack is not only a black-and-white tool used to accept or decline loan applications; it can also be used within the varying shades of loan amount and payment terms that lenders are willing to offer based on your credit score.
Why is it good for me?
For a simple reason that Teletrack is a good reminder and warning that we better pay off our debts to avoid ruining our credit scores. Without this “nuisance” it is far easier to default and forgo payments when no one, except the poor lender, will know anyway. Think of it as the note posted on the clubhouse billboard that lists members with arrears. Members wouldn’t want to be on that shame list so the tendency is to meet their obligations on time.
However, getting back to Jenny’s concern, we don’t discount the practical use of payday loans. In the UK and Canada, these loans have proven their worth. In times of financial difficulties, what are your options, really? So, how practical are they? It depends on how practical you want to make them. In short, payday loans are meant for emergencies and you must estimate how urgent and critical the emergency is to warrant payday loans online no credit check.
One last thing
Lenders offering payday loans online no credit check may not be checking your Teletrack record, but your payment to this type of loans will be recorded. That’s a tell-tale against your credit score. But don’t worry, there are regulations that limit or even prohibit the use of your Teletrack to profile you. Two years ago, Daily Finance reported that a Teletrack provider was penalized for two million dollars for selling sensitive Teletrack data to marketers.
Payday loans online no credit check are practical as long as they are used for practical reasons. Medical emergencies and business emergencies can be valid, but hot offers and limited deals are definitely not.
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