Millions use payday loans every year. Unfortunately, of those millions a huge portion of those are unaware of what payday loans are all about. Many use it because they were under the impression that it is easy to get. As a consumer it is important that you should understand about the whole payday loan process and how payday lenders qualify their lenders. One of the key questions here is how they make use of Teletrack.
What is Teletrack?
Before we go any further, we have to understand what Teletrack is. If you are familiar with payday loans and the websites of payday lenders, you might have come across some that promise that they do not use Teletrack.
Teletrack is a credit reporting firm. Just like the big firms Experian, Trans- Union and Equifax, it also keeps track of how we handle our credit, though we might not be aware that it is keeping track of that. They are allowed by the law to do that under the Fair Credit Reporting Act, which is the same law that governs the operation of the big credit reporting bureaus. There is a difference between Teletrack and the three big credit reporting agencies. Teletrack mostly caters to payday lenders, furniture stores and rent to own businesses. In short they deal mostly with sub-prime credit.
Banks and other traditional financial institutions are not known to use Teletracks in order to check the background of consumers applying with them. There is reason to believe that illegal businesses actually use the services of Teletrack. Because of this Teletrack does not have the same level of credibility that the other credit reporting firms enjoy. Some see the services that they provide to be on the border of being shady.
Credit Checks and Credit Reporting Bureaus
Before we go any further about Teletrack, we have to backtrack a bit and understand how credit reporting bureaus.
Credit reporting bureaus are companies that collect information on consumers using various sources. The kind of information that these companies collect deal mainly with credit performance of individuals and that includes the habits of the consumers when it comes to borrowing and to paying their bills. With enough information provided by credit bureaus, banks and other financial institutions can have a solid basis for selecting borrowers and for processing loan applications.
A consumer’s credit history is one of the major factors for determining creditworthiness and it carries the biggest weight. It determines whether a loan is going to be approved or not and also the amount of interest that will be charged.
When consumers apply for loans with a bank or some other traditional lender, they will be asked to furnish their information. Using the information given, the lenders will then check with the credit reporting bureaus for information matching the data. The lenders will use the records provided by the credit reporting bureaus in deciding whether to provide the loan, the amount of interest and coming with a credit score for an individual.
As you can see, the credit history of a consumer plays a very important role when it comes to finance. This is why people pay a great deal of attention to their credit standing. It can be difficult to use financial products when you have a bad credit standing. Lenders will see you as a high risk borrower. They would charge you a higher interest and in some cases refuse to give you a loan.
The Use of Teletrack for Payday Loans
Big lenders are reliant on the four major credit reporting bureaus and these are Experian, Equifax, TransUnion, and Innovis. They are the ones used by traditional lenders for credit checks. But you might have noticed the claim of payday lenders that they do not run any credit checks on borrowers. That is the main thing that payday lenders use when it comes to attracting new borrowers. There is no need for a credit check so even those with very bad credit scores can use payday loans. In reality, payday lenders do their own kind of credit checking. They have to find out something about the people that they will be lending money to. It is purely business for them and they have to reduce the amount of risk that they are facing.
It is true however that they do not run the same sort of credit checks that banks do. It is pointless for them to find out if a consumer has a bad credit history or not and that’s the reason why do not use the services of the big credit reporting bureaus. What they want to know is whether a consumer has defaulted on a payday loan before or has applied for a loan using different information and in order to find out about that, they turn to Teletrack.
Is Teletrack Check Involved in Payday Loan Approval Process
Because Teletrack keeps records of subprime loans which are more similar to payday loans, the information that it can provide has more relevance to payday lenders. There is no doubt that Teletrack plays a role in the approval process of a payday loan. If a lender were to discover through Teletrack that a consumer has skipped payments for payday loans in the past or has tried to use false information in loan applications before, then a lender can refuse to approve a loan. Why would they risk lending money to someone who has skipped loans in the past?
No Teletrack Payday Loans
Some people do not want to be checked through Teletrack just as they do not want to be checked through the usual methods and credit reporting bureaus. There are various reasons for that. They might have had a bad experience with payday loans in the past through no fault of their own. There are lenders now offering no Teletrack payday loans. Is that the kind of payday loan that you’re looking for? You just have to realize though that while these lenders would not really use Teletrack to check on you, they would still be using some other method in order to run a credit check. As lenders, that is part of their business process.
It is part of their business process as lenders to run some checking on the people that they would be lending money to. If they do not do that, they would be running a great deal of risk and no businessman would ever do that. So that means even if you get a “no credit check, no Teletrack loan,” be aware that the lenders would still check your credit history in one way or another.
The Payday Loan Approval Process
There are many payday loan companies out there and there is no set ways on how they operate. Some operate through storefronts with brick and mortar offices, while others process loans through the internet. Some operate through a combination of those two methods. Most people now prefer to borrow using online lenders because it is a lot more convenient. The only thing that they have to do is to go to the site of the lender and file the application using the forms that can be found there. After that, they will just wait for the approval. When the loan has been approved, the lender can then pick the amount to be borrowed and when it is supposed to be paid back. Once that’s done, the borrower would just have to wait for the cash. The cash can be directly transferred to the bank account of the borrower or pick it up from the lender’s office if there is a nearby branch. If a lender were to use Teletrack, it would be when determining whether a borrower is creditworthy or not.
Payday Loan Impact on Credit
Some people think that because payday loans do not require a credit check that it will not have a negative impact on one’s credit standing. There are even some people who believe that using payday loans would have a positive impact on one’s credit standing and so they recommend it for those who are looking for ways to get their credit in order. But this can be a dangerous thing to follow.
If you took out a payday loan and you paid it back on time, then that would have a positive reflection on your credit. One of the biggest factors in computing the credit score of the individual is payment history. Nothing would carry more weight than that. The problem is that payday loans are very expensive and paying it back on time is not easy as it might seem. According to researchers, a vast majority of the payday loan transactions are just “rehashed” loans. So if you took out a cash advance loan, there is a very real chance that it you might not meet the first payment schedule and then it would have a negative impact on your credit. If that keeps on happening, your credit standing would not even be the biggest of your worries, but the ballooning cost of the loan.