Do You Need To Have A Good Credit Score To Be Eligible For a Payday Loan?
There is a myth floating around in the financial industry that if you are saddled with a bad credit score or do not have any credit, then it is near to impossible for you to find a financing option that meets your distinctive financing needs.
Payday loans are an exception to some of the basic financial regulations. These are high cost and short-term loans that relieve the cash strapped consumers, by providing them what they need. So if you are planning to seek this option, you do not have to stress over your subpar credit.
The spokesperson of Community Financial Services Association of America (an organization that represents short-term lending, small dollar bills and payday advance industry), Amy Cantu states that,
“The typical payday loan borrower has a relatively small financial footprint and limited credit history,
and a traditional score is not necessarily an indication of their ability to repay the loan”
This does not at all mean that the payday loan lenders do not conduct any type of credit check on the borrowers, but unlike other financial institutions, they do not pull their tradition credit report, which can be accessed through the nation’s 3 major credit bureaus namely Microbilt, Teletrak and Clarity Services.
The major concerns of the payday loan lenders are the monthly gross income of the borrowers, their employment records and the length of time they have stayed with the bank.
For security reasons, they also acquire information on the credit history and monthly expenses of the borrowers from alternative bureaus and datasets. All these things allow the payday lenders to make an informed decision regarding the ability of the borrowers to repay the potential loan amount.
The list of specialty subprime credit bureaus can be found on the website of Consumer Financial Protection Bureau, along with the names of other credit reporting agency. You can also send the CFPD a request for the copy of your credit history, for the purpose of reviewing.
Though this loan option may entice most of the customers who are looking for urgent cash, but just because you can avail a loan on bad credit does not mean that you should. Payday loans look like a feasible option but they do come with high interest rates. So it is better to only avail this option, if you are hit by a sudden emergency.
Payday loans are better solutions than other options available in the financial market, for many people. They are also a way for the consumers to improve their traditional credit score, in order to secure more affordable financing options, in the future. You can check your credit score on a regular basis with credit.com, to be aware of where your credit currently stands. In addition, you can also report any error that you have found in your credit reporting and can come up with a game plan to improve your credit score.