Credit Rating Worries

I haven't posted anything in a while because I left the company I worked for, but after some personal issues prevented me from working for the company I left for I'm now back at the pawn shop as an Assistant Manager. I'm glad for the opportunity to reenter the pawn business and look forward to the coming experiences as well as contributing once again to this blog.

While working a couple of days ago, a customer raised a very legitimate concern that I often overlook. This customer was putting a loan under his name for a friend who had forgotten his ID. It was obvious to me that this customer had not taken out a loan at a pawn shop before because he was very skeptical and had a lot of good questions for me. One of which I would like to address in this post.

This customer, we'll call him Bill, asked if we would report it to the credit bureaus if his friend let the loan expire without making any payments. When I told him that the loan wouldn't affect his credit rating whatsoever, he was still skeptical and didn't fully believe me.

This is the point I made with Bill. A pawn shop, though considered a financial institution, won't (I haven't heard of a pawn shop that would, anyway) report to a person's credit on a defaulted loan because we already have the collateral for the loan in our possession. There's no reason for us to report it when it doesn't cause us to lose money. In other words, though we may be out a certain amount of money for the time being, we can sell the collateral and make the money back and (hopefully) even make a decent profit.

This is another reason why I would argue that receiving a collateral loan at a pawn shop is much less risky than a check cashing or payday advance store. If you were to let a payday advance go delinquent, the store would most likely charge you extra as well as having a hugely negative impact on your credit rating. They can also be sent to collections and quite possibly turn into a judgement on your report or lead to garnishment of your wages.