Banks are always looking for ways to reduce the risk profile of their business operations. As a major portion of their business is related to the mortgage given to their customers, they need to be very careful in choosing their customers. Over the past years, these banks have been trying various ways to avoid at risk customers. One of the latest strategies of these banks is to refuse mortgages for people who have used payday loans during the past one year. Mortgage lender GE Money has come out with this decision with a view to reduce their risk profile.
Payday loans are primarily used by people who are finding it impossible to meet the routine expenses associated with their day to day lives. In most cases, these loans are given for a couple of weeks of time. The problem with these loans is the atrociously high interest rates associated with them. As the habit of using payday loans in itself displays the irresponsible financial behavior of the person, the banks and mortgage firms are perfectly justified in their decision to avoid these high risk people. Still, this can be a bit unfair in the cases of people who have duly paid the pay day loan back in time.
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