Do you keep getting denied for payday loans?
About 40% of Americans don’t have enough money set aside to cover a $400 emergency. They’ll turn to other sources to get a quick influx of cash, including payday loans.
While a payday loan seems like a straightforward process, it is possible to get denied. Read on to learn the top reasons why people are denied for a payday loan and what you can do about it.
Why Do People Turn to Payday Loans?
People will use payday loans to cover recurring expenses or for an emergency. Payday loans are typically for small dollar amounts and are short term loan.
They’d much rather get a payday loan than borrow from a friend or family.
Why People Keep Getting Denied for Payday Loans
There are plenty of people who keep getting denied for payday loans. Despite having met the requirements, there are a lot of other reasons why you might not get approved for a payday loan. These are the most common reasons.
1. You Can’t Meet the Lender’s Minimum Requirements
Every payday lender has minimum requirements. Some of these requirements are set by the state where they operate. For example, similar to getting your first credit card, you have to be at least 18 to get a payday loan.
2. You Have Other Payday Loans
Have you taken out other payday loans in the past? Are you taking out this payday loan to pay off the others?
That will give lenders a sign that you’re having trouble making ends meet. That will impact your ability to repay the loan and can be a reason to keep denying you for payday loans.
3. You Overdrew Your Bank Account
Payday lenders will look at your bank account before approving your loan. They will deny your loan application if they find that you’re overdrawn on your bank accounts. They see that as a sure sign that you don’t have the funds to pay back the loan.
4. You Don’t Have Stable Income
Are you self employed or don’t have a steady paycheck? That could be a reason why your payday loan wasn’t approved.
5. You Can’t Verify Your Income
For those paid in cash, you will have a very hard time getting a payday loan. You have to be able to prove that you get paid on a regular basis. That’s the main criteria that lenders will use to figure out if you can pay the loan back or not.
6. You’re Collecting Unemployment or Welfare as Your Only Income
If you can’t already tell, proving your income is a big step towards getting approved for a payday loan. That’s because the whole premise of a payday loan is that you get an amount of cash to tide you over until your next paycheck.
If you can’t prove you have a paycheck, then you can’t get a loan. If you receive unemployment or welfare as your sole source of income, lenders don’t count that as income and will deny you.
7. Poor Credit Scores
There are some lenders who will do a credit check before they approve a payday loan. Every lender will have different requirements for a payday loan. Few lenders will check your credit history and use that as an indication of your ability to pay a loan.
8. You Filed for Bankruptcy in the Past
If you have a recent bankruptcy and you’re applying for a payday loan, lenders will consider you a credit risk.
Bankruptcy stays on your credit report for 10 years. Its impact on your ability to get a loan will diminish over time.
9. Misleading Information on Your Application
It’s tempting to put your application in the best light possible by exaggerating your income. You could selectively leave information off of your application.
There’s a good chance that the lender will find out on your credit report and deny your payday loan.
10. High Debt to Credit Ratio
When a lender looks at your credit report, there will be a number of things they look at. Your credit score, the amount of on-time payments, and your debt to credit ratio.
Your debt to credit ratio is the amount of credit available against how much debt you have. If you have a credit card with a $1000 credit max and your debt is $999, your debt to credit ratio is 99.9%.
How to Get Your Payday Loan Approved
Despite the reasons why you keep getting denied a payday loan, it is possible to get one approved. Talk to your payday lender and ask why your payday loan wasn’t approved.
If you find that your credit score was the determining factor, then look at payday loans for bad credit. You might qualify for a loan that has no credit check.
You could also take the time to rebuild your credit by getting a credit card. If you can make the payments on time you’ll be able to take steps to get your credit score up.
When You Need Cash In a Hurry
If you’re in need of a quick shot of cash that you can pay back in a few weeks, a payday loan can be a great option.
However, it is possible to keep getting denied for payday loans. Those who can’t verify their income or have a history of not being able to pay back loans will be in jeopardy of being denied.
You could be denied because you have a bad credit rating. In that case, it is possible to get a payday loan. Have a look at these payday loans for bad credit scores and get approved.
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