No Credit Check
Strange as it may sound, a lender that advertises “easy approval” or “no credit check” is more likely to be unscrupulous than one that requires a hard credit check. This is because legitimate banks take a risk-based approach to lending that’s primarily based on the information in your credit report. If you’ve got a history of credit problems, you’re likely going to pay a higher rate on your student loans than someone with a spotless history.
However, predatory lenders often don’t require a credit check because their loans are secured by your personal property. This means that if you run into problems paying back your loan, your lender can legally claim your collateral, be it your car or even your house. You never want to be in the position where you can lose something essential like that just because you’re having trouble paying back your student loans. In fact, the Federal Trade Commission even has a term for this type of high-risk secured lending, dubbing it “equity stripping” because it often ends up with borrowers losing some of their vital assets.
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September 23, 2021 at 06:19PM
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5 Signs of Predatory Student Lending and How To Avoid It - GOBankingRates
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