{"id":1947,"date":"2023-12-13T18:06:13","date_gmt":"2023-12-13T12:36:13","guid":{"rendered":"https:\/\/www.extramilefinance.uk\/blog\/?p=1947"},"modified":"2023-12-13T18:06:14","modified_gmt":"2023-12-13T12:36:14","slug":"why-are-credit-checks-necessary-for-text-loans-from-direct-lenders","status":"publish","type":"post","link":"https:\/\/www.extramilefinance.uk\/blog\/why-are-credit-checks-necessary-for-text-loans-from-direct-lenders\/","title":{"rendered":"Why Are Credit Checks Necessary for Text Loans from Direct Lenders?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_52 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e25b2f5a070\"><span class=\"\"><span style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e25b2f5a070\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.extramilefinance.uk\/blog\/why-are-credit-checks-necessary-for-text-loans-from-direct-lenders\/#What_do_text_loans_imply\" title=\"What do text loans imply?\">What do text loans imply?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.extramilefinance.uk\/blog\/why-are-credit-checks-necessary-for-text-loans-from-direct-lenders\/#Why_are_credit_checks_necessary_for_small_loans_like_text_loans\" title=\"Why are credit checks necessary for small loans like text loans? &nbsp;\">Why are credit checks necessary for small loans like text loans? &nbsp;<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.extramilefinance.uk\/blog\/why-are-credit-checks-necessary-for-text-loans-from-direct-lenders\/#1_To_identify_the_amount_you_can_afford\" title=\"1)&nbsp;&nbsp;&nbsp;&nbsp; To identify the amount you can afford\">1)&nbsp;&nbsp;&nbsp;&nbsp; To identify the amount you can afford<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.extramilefinance.uk\/blog\/why-are-credit-checks-necessary-for-text-loans-from-direct-lenders\/#2_Help_the_borrower_avoid_default\" title=\"2)&nbsp;&nbsp;&nbsp;&nbsp; Help the borrower avoid default\">2)&nbsp;&nbsp;&nbsp;&nbsp; Help the borrower avoid default<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.extramilefinance.uk\/blog\/why-are-credit-checks-necessary-for-text-loans-from-direct-lenders\/#3_Help_set_reasonable_repayment_tenure\" title=\"3)&nbsp;&nbsp;&nbsp;&nbsp; Help set reasonable repayment tenure\">3)&nbsp;&nbsp;&nbsp;&nbsp; Help set reasonable repayment tenure<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.extramilefinance.uk\/blog\/why-are-credit-checks-necessary-for-text-loans-from-direct-lenders\/#4_It_helps_the_borrower_make_an_informed_decision\" title=\"4)&nbsp;&nbsp;&nbsp;&nbsp; It helps the borrower make an informed decision\">4)&nbsp;&nbsp;&nbsp;&nbsp; It helps the borrower make an informed decision<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.extramilefinance.uk\/blog\/why-are-credit-checks-necessary-for-text-loans-from-direct-lenders\/#5_To_analyse_theft_risk_or_fraud\" title=\"5)&nbsp;&nbsp;&nbsp;&nbsp; To analyse theft, risk or fraud\">5)&nbsp;&nbsp;&nbsp;&nbsp; To analyse theft, risk or fraud<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.extramilefinance.uk\/blog\/why-are-credit-checks-necessary-for-text-loans-from-direct-lenders\/#What_If_I_find_a_guaranteed_loan_without_credit_checks\" title=\"What If I find a guaranteed loan without credit checks?\">What If I find a guaranteed loan without credit checks?<\/a><\/li><\/ul><\/nav><\/div>\n\n<p>When you need urgent money to fund your needs, you explore available sources. You may call out your friend or brother, explore existing savings or ask a roommate for help. What if none of these work on the day you need money? If you want one to charge the mobile plan, things get worse. It is because you cannot get cash online without an active internet plan. Things like these get on the nerves, and one panics.<\/p>\n\n\n\n<p>In this situation, having access to some immediate facilities like text loans can save you. You can access this without active internet connectivity. Sounds interesting? Yes, you can. These loans, as the name suggests, work thoroughly on SMS. You can text the company for the loan, and you can apply via text message. You get the cash deposited in your respective bank account by following one.<\/p>\n\n\n\n<p>However, these loans are easy to tap for small requirements, and most individuals fear rejection. Why? It is because of detailed credit checks that reveal the mark on the credit report.<\/p>\n\n\n\n<p>Well, the fear is genuine, as losing a credit score impacts credit improvement. However, credit checks are necessary. It helps determine the person\u2019s affordability. You do not need to be afraid of that.<\/p>\n\n\n\n<p>However, the blog discusses the reasons regarding the importance of credit checks in text loans.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_do_text_loans_imply\"><\/span><strong>What do text loans imply?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Text loans are for emergencies where you need money immediately. It could be any need like- having a medical appointment, credit card payment, car repair, mobile recharge, etc.&nbsp; Individuals finding it hard to follow online instructions get delayed in getting help. Moreover, one cannot access some facilities without good connectivity.&nbsp;<\/p>\n\n\n\n<p>It is the reason individuals prefer text loans that are based on texts. It works just like a payday loan, where you get cash depending on your income and affordability. You get immediate loan approval by providing legal income proof.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_are_credit_checks_necessary_for_small_loans_like_text_loans\"><\/span><strong>Why are credit checks necessary for small loans like text loans? &nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According to FCA guidelines, \u201cEvery direct lender must conduct a responsible credit check on every loan applicant.\u201d Therefore, it is unlikely to spot any lender that offers a loan without basic checks.&nbsp; It threatens your credit profile and you may default if you get a loan. Here are other reasons why legal and responsible direct lenders conduct a detailed check before approving a loan:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_To_identify_the_amount_you_can_afford\"><\/span><strong>1)&nbsp;&nbsp;&nbsp;&nbsp; <\/strong><strong>To identify the amount you can afford<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>No legal lender will provide you the amount to ask for just like that. He will analyse the potential to pay back the amount with interest rates comfortably. If you cannot afford it, he may deny the approval.<\/p>\n\n\n\n<p>Additionally, he determines affordability by checking several factors like- income, recent payment history, the amount you need, and recent debts. It helps him decide whether you can pay the loan back. If you qualify for the check, he provides you only the amount you can pay. It may be lower than what you need, but that\u2019s the amount you may legally qualify for.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2_Help_the_borrower_avoid_default\"><\/span><strong>2)&nbsp;&nbsp;&nbsp;&nbsp; <\/strong><strong>Help the borrower avoid default<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>When you <strong><a href=\"https:\/\/www.extramilefinance.uk\/loans\/borrow-money.html\" title=\"apply for\u00a0text loans from direct lenders\">apply for\u00a0text loans from direct lenders<\/a><\/strong>\u00a0that suit your finances, you know the amount you want. However, as mentioned above, you may not get the desired amount. It indirectly helps you avoid a default that may sincerely hit your credit score.<\/p>\n\n\n\n<p>It is because borrowing an amount you can barely afford means missing payments and this phenomenon ultimately leads to loan default. Moreover, the impact will be high as text loans have competitive interest rates.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"3_Help_set_reasonable_repayment_tenure\"><\/span><strong>3)&nbsp;&nbsp;&nbsp;&nbsp; <\/strong><strong>Help set reasonable repayment tenure<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Without credit checks, one cannot know the amount you can dedicate towards the loan as a monthly payment. Choosing a random amount may lead to unfavourable consequences later.<\/p>\n\n\n\n<p><em>&nbsp;For example, you apply for \u00a31200 as text loans for 4 months, but your income permits at least 6 months of repayment. What will happen? You cannot make payments within the agreed date, and the loan enters default. Next, the lender may issue a CCJ against you to retrieve the loss and it may further impact your credit score.<\/em><\/p>\n\n\n\n<p>Therefore, every lender conducts a basic credit check to analyse the liabilities or bills you pay monthly in contrast to income. Accordingly, he decides the repayments and repayment terms you can comfortably pay the loan within.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"4_It_helps_the_borrower_make_an_informed_decision\"><\/span><strong>4)&nbsp;&nbsp;&nbsp;&nbsp; <\/strong><strong>It helps the borrower make an informed decision<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>It is helpful from the lender\u2019s perspective and the borrower\u2019s. When you know the amount you can afford, the repayments you can realistically make and the term you can pay the loan within, you can decide whether to proceed.<\/p>\n\n\n\n<p>However, it may not be possible to calculate without a credit check. In that case, you may randomly decide to take the loan and regret it later. You may even enter the debt trap. The condition gets worse in that case.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"5_To_analyse_theft_risk_or_fraud\"><\/span><strong>5)&nbsp;&nbsp;&nbsp;&nbsp; <\/strong><strong>To analyse theft, risk or fraud<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>It is one of the important reasons that lenders conduct credit checks. It safeguards their interest and limits vulnerabilities to security breaches.<\/p>\n\n\n\n<p>Risky credit profiles with a history of fraud, bankruptcy, insolvency, or theft are a threat to lenders. Thus, lenders gauge the authenticity of the borrower with a credit analysis.<\/p>\n\n\n\n<p>He also demands an ID and income proof before providing the loan to support this search. It helps him ensure clarity of a person\u2019s identity and prevent theft.<\/p>\n\n\n\n<p>However, with the firms holding crucial customer details, lenders ensure encryption for customer safety.<\/p>\n\n\n\n<p>These are some potential reasons lenders conduct credit checks before providing any loan. Whether you need a text loan or a mortgage, a basic check forms the base.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_If_I_find_a_guaranteed_loan_without_credit_checks\"><\/span><strong>What If I find a guaranteed loan without credit checks?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If someone promises you to provide a guaranteed loan without credit and income checks, avoid it. You may be dealing with\u00a0<strong><a href=\"https:\/\/www.extramilefinance.uk\/\" title=\"private loan sharks in the UK\u00a0marketplace\">private loan sharks in the UK\u00a0marketplace<\/a><\/strong>. It is a bait for customers. You may find unbelievable and exciting loan rates and terms.<\/p>\n\n\n\n<p>For example, they may not ask for any proof before providing loan approval. However, it may prove risky later. They increase the interest rates and may demand more than you owe. Non-repayment may lead to life-threatening situations. Thus, always enquire about the authenticity of the lender by:<\/p>\n\n\n\n<ul>\n<li>Checking its online presence<\/li>\n\n\n\n<li>Analyse whether the address exists<\/li>\n\n\n\n<li>Call the number mentioned<\/li>\n\n\n\n<li>Check for spelling and Google the name<\/li>\n\n\n\n<li>Does the domain seem inappropriate? Close it immediately.<\/li>\n<\/ul>\n\n\n\n<p>It will help you safeguard your personal and financial interests.<\/p>\n\n\n\n<p><strong>Bottom line<\/strong> Credit checks are necessary for text loans. It helps the lender know about your affordability, income, recent credit behaviour and the amount you can comfortably afford. It helps avoid any impending credit insecurity and panic later. It is because you only get what you can comfortably afford. No credit checks or minimal credit checks help determine the affordability. It safeguards both lenders&#8217; and borrowers&#8217; interests.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>When you need urgent money to fund your needs, you explore available sources. You may call out your friend or [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1948,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[284],"tags":[286,95],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/posts\/1947"}],"collection":[{"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/comments?post=1947"}],"version-history":[{"count":1,"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/posts\/1947\/revisions"}],"predecessor-version":[{"id":1949,"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/posts\/1947\/revisions\/1949"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/media\/1948"}],"wp:attachment":[{"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/media?parent=1947"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/categories?post=1947"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.extramilefinance.uk\/blog\/wp-json\/wp\/v2\/tags?post=1947"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}