If You Have Bad Credit, Can You Qualify for a Payday Loan?
Today we will talk about getting payday loans with bad credit history. You will learn what a bad credit loan is and where to get it with no paperwork and credit checks, as well as what you should be wary of when applying for a bad credit loan.
Can I get a loan with bad credit?
If you need money urgently and relatives and friends cannot provide the necessary financial assistance, then a good way to resolve the problem is to contact companies that are ready to issue a bad credit loan.
Cooperation with banks and microfinance companies affects your credit history. If you regularly fulfill your debt obligations to creditors, this opens up new opportunities for re-issuing a loan and allows you to count on more favorable lending conditions.
But defaulting on debt obligations can significantly ruin your credit history.
Credit history is an indicator of the borrower’s credit reputation, which is the main reference point for banks when approving a candidate.
It is important to note that a bad debt repayment experience is not a death sentence for borrowers. Due to the fierce competition created in today’s microfinance market, many microfinance companies do not refuse to cooperate with clients who have a poor credit history.
You can easily get a payday loan with bad credit in the following cases:
- if the borrower delays in payment for a few days;
- if the borrower has no outstanding debts at the time of application;
- if there are objective reasons that caused the delay in payment.
You can get a payday loan with bad credit right now, but its amount will be limited. Most customers with bad credit prefer using online referral services that match a potencial borrower with the most suitable lender from the network, which increases the chances of getting approved. Just provide basic personal details to get connected to the right lender for your needs:
Why credit history is not important for payday lenders?
High APRs allow companies to provide payday loans without much damage to their capital, which is why the credit history of borrowers does not play a special role for them.
Many borrowers contact microfinance companies in cases where other organizations refuse to cooperate with them. Microfinance companies take advantage of this and charge slightly higher interest rates that banks. Additionally, such actions are designed to reduce the risks of cooperation with an irresponsible client.
Pros and cons of bad credit loans
Payday loan providers make lending decisions within a few minutes or even immediately. If the application is approved, the funds will be transferred to the borrower’s bank account very quickly – usually the same day or the following day.
At the same time, you can choose the most convenient form of receiving money – typiallly, the money is transferred remotely.
Bear in mind that payday loans have a few shortcomings:
- higher interest rates;
- short repayment periods (up to 31 days);
- small loan amounts ($100-$1,000)
However, these shortcomings can be viewed from the other side. For example, short repayment periods cannot be called a downside because the borrower is interested in repaying the debt as soon as possible. The sooner you repay the loan, the less you will have to overpay.
High approval rates makes payday loans very attractive to a wide range of consumers. That is why their popularity will only grow in the USA.
The table below shows the advantages and disadvantages of payday loans for borrowers with bad credit:
|high approval rates||high interest rates|
|no paperwork||short repayment period|
|easy online application||small loan amounts|
|money for any purpose|
|bad credit accepted|
Why people with bad credit take payday loans – 3 top reasons
There are several reasons why you might need a bad credit loan from microfinance companies.
- Banks declined your loan request. The most common reason for taking a payday loan with bad credit is the inability to cooperate with conventional banks. The latter are very reluctant to work with clients who have had a bad experience in repaying previous loans. Microfinance companies remain the only way out in this situation.
- You need cash urgently. You know there are situations when you need money right away but there is no one to borrow it from… Payday loans are very suitable for this case. You can expect to have the money in your bank account within several hours or even minutes – and you can spend it on urgent needs.
- You need to improve your credit history. Many borrowers take out a payday loan just to fix a bad credit history. This is a great opportunity to improve your relationship with banks. In the future, you will be able to get more favorable lending terms. When you take out several small loans and repay them on time, financial institutions see that you are a responsible borrower and agree to cooperate with you again.
How can you check your credit history?
All data on loans that have been issued over the past seven years are stored in the credit bureaus.
You can chec out your credit history in various ways:
- Contact a credit bureau. You will have to visit the nearest branch and bring your identification documents with you.
- Visit official websites of banks. If a financial institution has declined you for a loan, then you can send a written appeal to find out the loan rejection reason.
- Register with a credit information agency. Such agencies cooperate with credit bureaus as closely as possible. They specialize in processing applications that have been submitted online. You will need to verify your identity in order to access the required information.
- Contact commercial Internet services. There are commercial Internet services that specialize in providing such a service online. The most popular service is Equifax.
You are entitled to a free credit report every 12 months from consumer reporting companies.
Things to consider when applying for a loan with no credit checks
Taking out a payday loan is a very responsible step, which should be taken only after an objective assessment of your solvency. Despite the small loan amounts, rash cooperation can end up in serious problems.
When applying for a payday loan without no credit checks, one should be wary of high interest rates and also scammers who may act as unreliable lenders.
- High interest rates. Microfinance organizations will not be able to surprise anyone with high interest rates. You already know the risks you are taking when cooperating with such lenders. However, high interest rates are quite justified, given that microfinance organizations issue loans to their clients without checking their credit history.
- Fraudsters. Cooperation with fraudulent credit organizations is a much more serious problem. Some credit organizations can take your personal data and use it for their own purposes. In order not to get into an unpleasant situation, you should not contact unknown and suspecious companies. It is also recommended to refuse cooperation with private individuals. By agreeing to lower interest rates, you always run the risk of ending up with nothing.
- Reassessment of financial opportunities. Another reason for the emergence of difficulties in cooperation with microfinance organizations is the overestimation of your financial capabilities. If you assess your solvency incorrectly, you risk falling into a debt hole.
Remember the basic rule of 40%. According to this rule, your loan payment shouldn’t be more than 40% of your monthly income.
At the end of the article, we would like to note once again that a bad credit history is not an obstacle to getting a payday loan. Moreover, a payday loan can be considered as a reliable tool for improving your credit history, thanks to which you will be able to cooperate with banks in the future.
Tags: cash advance, finance, money, payday loans