Lower credit ratings leave you with minimal options for lending. In an emergency, when you need funds fast, traditional loans will be a struggle. Payday is coming, but the cupboards are empty, and bills are on their way.
If this sounds familiar, short-term loans with direct lenders offer a solution.
Here is quick guide to payday loans with bad credit.
Why Do Payday Loans Look Past Your Credit Score?
Direct lenders consider your income and expenses more than your credit score. Even with a bad credit history, if you documents show that your can afford to repay the loan, you should get funding. Your direct lender will perform a credit check, but this is more for verification purposes.
Employed UK residents over 18 should have no issues applying. Some direct lenders guarantee funding on the same day if you are approved. But if you meet the criteria, your chances are high.
Even without a guarantor, you can get funds to your account the same day. Payday loans should be unsecured, so never deal with a lender who asks for collateral. Your income and expense sheets should be enough. Make sure these show figures from all your accounts.
Can a Payday Loan Help Your Credit Rating?
You can apply for a payday loan with no credit history, as well as with bad credit. While this is far from an ideal way to boost your score, successful repayment will at least be on there. Due to the short-term nature of this type of loan, your repayments will be in limited instalments.
To improve your credit score, regular repayments over a long period of time work best. This is why mortgages, credit cards and secured loans lead to better scores.
Applying for a payday loan won’t harm your credit score. Direct lenders use soft credit searches to check your eligibility. These leave no trace on your credit score; banks, employers and other creditors can’t see them.
Other types of lenders perform hard credit searches. These are more comprehensive and show up on your credit report. This can affect your rating with some creditors, especially if done many times.
How to Apply for a Payday Loan
Make sure representative APR, total interest and repayment amounts are crystal-clear. Your lender should brief you on the dangers of short-term loans too. As responsible lenders, they have a duty to do this, so never deal with lenders who sweep this under the carpet.
You will need submit proof of residence in the UK, a form of ID and financial records. Include all income and expenses over the last 6 months. If you need more, your direct lender will tell you, but this should be sufficient. The best direct lenders are GDPR-compliant, and your data will be safe.
Online payday loans are your fastest option. You can submit everything on their site and wait for approval.
Get the Help You Need Even with Bad Credit
Short-term loans are an option even if your credit score is bad. By choosing responsible direct lenders, you can top up your balance before payday.
Make sure you can afford the repayments. Be open and honest about your finances. Reliable lenders will help you with the rest.