Many plaintiffs seek out a form of lawsuit funding to help pay bills while they await their settlement. If they apply for a traditional personal loan, then they can expect the bank to run a credit check in order to approve the loan, but the unique legal situation of the plaintiff often means that there will be red flags in these credit checks. But if the plaintiff applies for a lawsuit loan instead, no credit check will be necessary and the plaintiff could see their money faster. Some common problems that plaintiffs have with credit checks include:
How many inquiries there are. Whenever a person applies for credit, the lender will make an inquiry to look at their credit report and the report will keep track of how many inquiries there are, so plaintiffs applying for lawsuit funding may run into trouble with obtaining a traditional personal loan if they’ve made too many inquiries. Many traditional lenders will see too many inquiries as a warning sign of unstable credit and this may lead them to deny the applicant. Plaintiffs often try to use credit cards to pay their expenses before applying for a loan so this is a common roadblock for plaintiffs in need of funds. The same goes for how many open credit accounts the plaintiff has.
How much they’re making. One of the main things that traditional lenders look for is whether the applicant has a high enough income to be able to make loan payments. The problem for many plaintiffs, however, is that they may not be working due to the incident that resulted in the lawsuit, such as a workplace injury or a personal injury. The bank or other lender may deny a plaintiff for a loan if they do not want to take a risk on an applicant without an income, even if they are receiving insurance or worker’s comp. Lawsuit loans work differently, and do not require applicants to have a current source of income and it is actually common that their applicants do not have one.
Debt. If an applicant already has debt, then a bank may not feel confident that the applicant can repay the loan. Plaintiffs commonly have this problem because they’ve often already experienced financial strain before they apply for the loan.
Missed credit card payments. Lenders will look to see how responsible an applicant has been regarding their rent, car, mortgage or other bills over the years to gauge whether the applicant would be able to handle repaying the loan. If a plaintiff has been dealing with the circumstances of their lawsuit, then there is a good chance that they may have struggled to make these payments.
If a plaintiff is worried about any of these problems, then pursuing a lawsuit loan instead could be a better option.
About the Author: Steven Medvin is the Executive Director of SMP Advance Funding, LLC, which provides lawsuit funding to individuals who need a lawsuit loan for pending lawsuits. For more information please visit www.smpadvance.com.