May 31, 2016
Most types of creditors conduct a credit check before awarding their borrowers with loans. A borrower is expected to fill out numerous forms and provide details such as income, employment history and credit history. This is not the case with unsecured lenders who specialize in bad credit payday loans. An individual simply needs to fill out one form and then submit their application for the payday loan. So, why payday lenders don’t perform a credit check? Read on to find out.
Payday loans are short-term loans which are also unsecured. This means a borrower’s property is not taken as collateral for the loan. Payday lenders are therefore only interested in the ability of the borrower to repay the loan, interest and fees for it on their next payday. As a borrower, you are also to ensure that you will be able to repay the loan. This means that given your expected salary, the amount of money (which include the loan amount, interest, and fee charged) you are paying the payday lender , can be repaid with ease and you will still be able to manage your monthly expenses with whatever is left. This ensures that you will not have to take out yet another loan. Healthy financial decisions will keep you from falling into a vicious cycle of indebtedness.
Payday lenders are not interested in the borrower’s credit history. Their main interest only lies in the ability of the borrower to clear the payday loan when it is due. Therefore, the credit check is not necessary. This, in turn, lets the loan application process to be surprisingly fast. Once payday lenders are confident enough that you can repay the loan with your next salary, the loan amount will be deposited into your bank account.
In most circumstances, individuals who turn to payday loans may have poor credit scores. Therefore, other lending institutions turn down their application for a loan. However, payday lenders reach out to these types of people and provide them with easy access to funds. The distinguishing characteristic of payday lenders is ensuring the financial inclusion of individuals who are unable to access funds from other types of financial institutions or lenders. This means not conducting credit checks as it would limit individuals with poor scores from getting payday loans.
If you have a regular income stream but have to meet an urgent financial obligation, a payday loan would be a good option. Having a bad credit score will not affect your chances of getting a payday loan. This is because payday lenders will not conduct a credit check. The loan will be awarded based on your ability to repay it with your expected regular income, rather than your credit history. Therefore, the amount of money that can be lent to you will depend on your ability to repay the loan rather than your credit record. If you would like to avoid the tedious loan application process with other types of loans, you can apply for payday loans without the worry of credit checks. Additionally, you can compare and shop for a payday loan and see which payday lender will offer you a better deal. Payday lenders have made accessing extra funds so easy!