A study found that only 24% of personal loan borrowers get approved for their application. Only a third of those signed the loan agreement, likely because the loan came with a high interest rate.
Whether it’s a higher interest rate or downright rejection, credit scores have a lot to do with both. After all, a credit score is one of the most important qualification factors lenders use. If you have a score lower than 601, like a third of Americans, lenders are likely to deny you a loan.
There’s still hope though, in the form of poor credit payday loans online.
That’s right. Such loans exist. Regardless of the current state of your credit score, you can qualify for these loans.
But what are payday loans in the first place? Is there a catch?
We’ll answer all these and more in this post, so be sure to keep reading!
What’s in a Poor Credit Score?
Let’s say you have a FICO score, which is one of the most common scoring models in the country. These scores range from 300 up to 850, with a good score being 670 or above.
Only 59.6% of FICO-scoreable individuals have scores between 670 and 850. 17% have a very poor rating, with their scores falling below 580. Even the “fair” rating (scores between 580 and 669) is already considered a subprime score.
If your FICO score falls under the very poor rating, you’re unlikely to get approved for a loan. A fair score may qualify you for a loan, but prepare yourself to deal with an exorbitant interest rate.
The VantageScore scoring model, also ranging from 300 to 850, pretty much has the same rules. Over half of people with VantageScores have poor (550 to 649) or very poor (549 and lower) scores. If you have a VantageScore within these ranges, you most likely will get denied of a loan.
There are several other credit scoring models, but they follow the same concept. Low scores mean low to zero chances of loan approval.
Where Payday Loans Come In
Payday loans are small, short-term funding programs designed as bad credit loans. When you take out one, you’ll need to pay it back in full when you get your next paycheck. That can be within 15 days or the 30 months.
So, what’s so special about them?
If you have poor credit, traditional lenders will consider you a high-risk borrower. They won’t be comfortable lending you money, since a low score may tell them you can’t pay your loan back on time. That then lowers your chances of qualifying for loans, be it a mortgage or a personal loan.
Payday loan lenders aren’t so strict, as they don’t use credit scores as a major qualifying factor making them personal loans no credit check. Instead, they’ll look at your ability now to pay back the money you’ll borrow from them. If you have a steady job or source of income, that’s good enough for payday lenders.
In fact, there are payday loans specifically for people with bad credit. The main basis for qualification is your current income and not your credit score. In short, lenders won’t take your previous borrowing activities against you.
Furthermore, many payday loan lenders don’t run credit checks on their applicants. And even lenders who do only run soft credit checks. That means you don’t have to worry about the credit check affecting your loan eligibility.
Proving Your Repayment Ability
So then, how do you prove your ability to repay quick payday loans? You can do that by giving the lender bank statements showing your monthly income. This statement should be for the bank account where the lender will deposit your loan money.
Most applicants who meet this requirement often get their payday loans online approved right away. In fact, only those who are in bankruptcy don’t qualify.
But to further boost your approval chances, provide a backup credit or debit card. Doing so will make the lender feel more at ease knowing that they can still get their money back. The more comfortable they are, the higher your chances of getting approved for the loan.
The Convenience of Poor Credit Payday Loans Online
There’s no need to Google “payday loans in my area” because you can apply online! You can complete the entire process online, which starts with creating an account. You’ll use this online account to submit documents (like your bank statements).
This is also where you’ll supply your other personal and financial details. That includes your complete address, mobile and alternate phone, and social security number. Most lenders also need you to provide a copy of your driver’s license.
Be sure to enter the correct details of your valid bank account. Remember, this is where the lender will deposit your loan amount. This is also where they’ll take your payday loan payment from. In some cases, you can also use your debit card to receive your payday loan, as long as it has a routing and account number.
Now, compare that with all the documents you’d need when taking out a traditional loan. As you can see, payday loans are far easier and more convenient to apply for. Plus, you have a much higher chance of getting approved despite your poor credit score.
How Much Can You Borrow?
This depends on the lender and your monthly income, but you can loan up to $5,000. Before you apply for a $5,000 loan though, be sure to assess your finances first. Anything above $5,000 would put in the range of installment loans, which would require a full credit assessment, and a higher credit score to qualify.
Remember, a payday loan is a loan you pay back when you get your next paycheck. Even if you can apply for $5,000, you need to be sure you can pay back the entire loan, plus interest, on your next pay date. It’s best to settle for a smaller amount or at least one you’re 100% sure you can pay back on time.
Ready to Get the Loan You Need?
Then start comparing your poor credit personal loans online now! The sooner you do, the sooner you can get access to the quick cash you need. Be it for an emergency expense, such as a sudden car breakdown or a leaky roof, you can use your loan to cover such costs.
We can help you find the most suitable payday loans regardless of your bad or poor credit score. Request your loan now so we can start your application process! Here are some other articles you might find helpful: