Unlike most other forms of borrowing, your credit rating shouldn\’t necessarily have a noticeable effect on whether your application is successful or not when seeking a payday loan. The reason for this is simple enough: lenders aren’t overly concerned about your history, only your ability to repay the loan.

Whilst some companies continue to employ credit checks just to ensure that they don’t end up lending to people who pose the highest risk, most decisions aren’t provided simply on this basis. Lenders have a responsibility to only ever accept applications from people who can afford to repay the money. This doesn’t just protect the company from losing money, it also ensures that potentially vulnerable people don’t accrue more debt than they can reasonably afford.

So what else do payday loan companies use?

Rather than relying on credit ratings to decide whether an application should be approved, most lenders will employ a number of checks to ensure the legitimacy of the customer. This includes very general issues, such as ensuring that they are a legal age to borrow (18 in the UK) and have a valid bank account. If the applicant fails these rudimentary checks, then they will be declined instantly.

Employment is probably the biggest factor to be considered; not a major surprise considering their name. Therefore it is important that the lender can validate that you are currently in some form of employment and receive a regular salary. Some will accept part-time workers, whilst other companies are stricter. Equally, you might find that a number of companies look for those who receive their salary monthly (just to carry out the necessary checks) and decline any that are paid weekly or on an ad hoc basis.

The size of your total monthly pay packet will need to meet or exceed the minimum level set out by the payday loan company. Again, this can vary from one lender to the next, but it’s safe to assume that if you’re not taking home in excess of £500 your options will be severely limited. The more you earn, the better your chances of being accepted.

This might sound a little prejudicial against those who are struggling on small salaries but, returning to the earlier point, it is in the best interests of both the lender and borrower to earn enough to repay the loan outright. Therefore if you’re applying for £300 and only earn £400 a month, there is clearly going to be an issue when it comes to repaying the loan – particularly when interest is applied.

In many regards the use of your salary as a guarantor is one of the most liberating aspects of payday loans. Anybody can have a bad credit rating and sometimes it is completely beyond their control. Black marks can haunt you for years, even if they aren’t representative of your most recent activity. So by eliminating this as the deciding factor for borrowers, it opens the door to more people who are in desperate need of money.

Also, because of the lack of credit checks, you can often carry out more than one application if you find you have been declined. If you were to do this with a standard personal loan, your rating would suffer for a few months afterwards, making it almost impossible to reapply anywhere else. This does also open the door to multiple payday loans being active at once, which is a huge risk, but responsible borrowers should certainly steer clear of any such risks.

So even if you’ve got a poor credit rating, this shouldn’t prevent you from getting a payday loan. Make sure you meet all the other requirements, but as long as you are in regular employment and receive a decent salary each month, you should have everything needed to secure a loan.

Vincent Rogers is a finance writer who writes for a number of finance businesses. For payday loans, he recommends Paydaypower.co.uk

Vincent Rogers is a finance writer who writes for a number of finance businesses. For payday loans, he recommends http://Paydaypower.co.uk

Author Bio: Vincent Rogers is a finance writer who writes for a number of finance businesses. For payday loans, he recommends Paydaypower.co.uk

Category: Finances
Keywords: payday loans, same day loans, loans, UK, finacne