| No Credit Check Bad Credit Loans |
| By Credit Federal |
Published
06/24/2009
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Financial News
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Government Legislation and the Future of No Credit Check Bad Credit Loans
As for now, most Americans still have access to one type of easy approval, no credit check bad credit loan. But some states have outlawed the most popular bad credit unsecured loan... the payday personal loan.
Apply for a bad credit personal loan with no credit check
If democrats have their way, that one easy approval loan resource will go completely bye-bye.
FACT... Credit card companies and loan lenders want to offer you the lowest interest rates and the least fees as possible. This is called 'competition' in a free-trade market. If a credit card company or loan lender doesn't offer customers a good deal, then they risk losing customers to competitor companies. So, it's simple to see that it is in their best interest to offer each applicant the lowest interest rate as possible. Until recently, credit card companies and loan lenders were able to offer competitive rates even to troubled credit people, because they could later adjust their interest rates uniquely, per each individual, for those who's credit scores dropped and hence posed a high risk of default. Meanwhile, other customers who maintained; or improved, scores enjoyed the same or lower rates. One group was not penalized because of another group, and even troubled credit people could get approved at fair rates.
But a new law now forbids credit card companies and loan lenders from adjusting interest rates on existing accounts. What effect will this have? Either credit card companies and loan lenders will start-off troubled-credit people with much higher interest rates than they used to start them off with, or they simply won't approve their application. Afterall, if they cannot adjust the interest rates on such accounts once they become active and prove to be a higher risk than expected, then why take the chance?
Who is to blame for this pending doom...
Democrats (and the President) have just passed legislation against credit card companies that likely will stifle; or completely eliminate, credit card offers for bad credit people. The new law prevents credit card companies from independently adjusting interest rates according to each cardholders credit rating. For example: Even if John Cardholder is 60 days late paying his mortgage or his auto loan and it appears he will also default on his credit card, the credit card company is now forbidden from raising John Cardholder's interest rate nor can the company reduce his credit limit. While this may sound like great news for John Cardholder, what about Suzy Applicant who has less than perfect credit and who wants a credit card? Even if Suzy Applicant gets approved, thanks to John Cardmember, Suzy may have to pay super high interest rates because the credit card company cannot raise her rates if her credit worsens thanks to the new law, so instead they charge her a super high rate from the get-go. This is so they can recoup what they lost on John Cardholder, while also providing financial security should Suzy Applicant also become a loss. Thanks, democrats!
This is not the first snafu made by the democrat party. Remember prohibition? It started under President Woodrow Wilson (Democrat). And do you recall that sordid bit of history, when criminals thrived by selling illegal alcohol?
What's likely to happen under this latest democrat legislation that denies lenders from adjusting interest rates/fees against ONLY those active accounts which pose a threat of default? Lenders will either charge ALL new applicants higher interest rates from the start, or simply won't grant credit at all to those with credit troubles.
If the government continues to impede upon the credit industry's ability to protect against financial default, poor credit people (or perhaps all poor people, including those with fair credit ratings) may have to get their loans from dark alley ways, much like where Americans obtained alcohol during prohibition.
Put yourself in a lender's shoes... If a stranger came to you with a bad credit rating and/or low income and asked for a loan with no security deposit, no collateral and no credit check, how comfortable would you be in granting a cash loan? That's the same situation credit card companies and payday personal loan lenders face everyday. Unlike you; however, lenders must follow government regulations which tie their hands and expose their financial security to greater high risks. And with the recent legislation, the new binds my force lenders to stop issuing credit cards and loans to bad credit people, and even to borderline, poor-to-fair credit people.
Where will such people turn to get the funds they need once democrats have squashed subprime lenders? Will democratic senators and congressmen fill the void? Not likely.
If you have less than perfect credit, contact your state leaders and tell them to allow free-trade within the credit industry and to overturn legislations that do; or likely will, put an end to credit cards and loans for poor credit people who need credit services the most.
New Government Credit Card Act - how it may stop bad credit card and no credit check loan offers.
Government Credit Card Control Dooms Rewards - how government rules may stifle free competition.
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