Getting Personal Insurances With No Credit Checks: Insurance Opportunity For Bad Credit Borrowers

There is a general belief that those of us who have had terrible credit scores are bound to find it impossible to get a insurance. But in fact, with the growth of options available from online specialist lenders, it is possible to get some small personal insurances without a credit check.

It may seem like a big risk for lenders to grant insurances without checking the applicant’s credit history – and it is certainly true. As a result, there are some compromises that applicants have to make if they want to get approved despite bad credit.

But what are the special conditions that the application must accept when applying for this type of personal insurance? And how can a lender give approval with such confidence when it is clearly at great risk?

No Credit Checks: Reckless or Wise?

Any lender who accepts the risk of dealing with bad credit borrowers without a doubt has already clearly calculated the chances of making a profit from the transaction. Remember that no lender enters into a insurance deal with their eyes closed, so giving personal insurances without a credit check is a carefully considered strategic insurance option.

The simple fact is that statistics consistently show that borrowers are more interested in rebuilding their credit reputation than they are about taking the money and running it. In any case, a large proportion of borrowers with bad credit are honest borrowers who fell victim to the economic meltdown of four years ago. So, getting approved despite bad credit is not a huge risk.

Also, credit scores have never been a major aspect of the approval process, so if any part of it is to be set aside to provide a personal insurance faster to access it, the minimum risk is associated with a credit check.

Insurance restrictions

But lenders aren’t about to give a $50,000 insurance to someone who hasn’t been fully vetted. They set clear limits on the size of a personal insurance, with no credit checks offered for small amounts of $100 to $1,500 only. Moreover, they come with very high interest rates to protect them from losses.

There is no ambiguity in these limits, as the minimum insurance amount ensures that the maximum losses are kept low. This means that submitting approval despite bad credit is really beneficial for applicants who have to pay specific contingent expenses or debts. Perhaps, a hospital bill or final notice about a late mortgage payment, for example.

For the borrowers, a small insurance does not help much to put pressure on repayment of these personal insurances when high interest rates (25%) are charged, and the repayment period is as short as only 14 days.

Payday insurances and cash advances

The fact is that these insurances are known as payday insurances, or cash advance insurances. This is because they are given in return for an imminent salary, and not on the basis of a long repayment period. Offering personal insurances without credit checks means approval is almost certain, just proof that the next check is big enough to cover the amount borrowed plus interest.

Repayments are usually completed in one go, and it is a policy that also protects the lender because there is less chance for the borrower to fall behind or default. Moreover, even though approval is given despite bad credit, the possibility of their money back is almost guaranteed.

However, it is essential that the borrower budgets for the deal, with a $1,500 personal insurance that requires a repayment of $1,875 – too much to take out of a single paycheck.