Do Online Payday Loans Need Credit Check?
Your credit rating is important as it is a measure to understand how risky is to provide you loans by the financial institutions. The credit check gives an indication of your ability to manage your credits. Credit check indicates whether you have made your credit payments on time in the past and how many times you have missed the payments and whether you have paid off the debts completely and what are the current credits you are having.
Money lenders depend on the credit rating issued by various bureaus to decide on whether to lend money to a person. Any credit given to you by the payday loan lender will be informed to such bureau so that it will be added to your updated credit report.
Most of the money lenders that provide payday loans claim that they do not check the credit report of the applicants. Let us see how true this claim is?
The majority of the payday loan lenders do not check your credit report while processing the loan application. Hence the applicant will be able to receive the required credit in emergency situations. Most of the banks and other financial institutions, on the contrary, will check your credit history before issuing money to the applicant and this will take time. With payday loans, the person will be able to receive the emergency funding within 24 hours. The online payday loans get deposited into your bank account directly and withdraw from the borrower's bank account electronically on next payday. If you are unable to pay back the amount within your next payday, you can opt to roll over the loan for one more pay period.
Your income is the key factor for payday lenders
The amount you can borrow from payday lenders mainly depends on the income you receive every month. Payday loans are short-term loans (repayment within one month) and the lenders are more interested in your next paycheck than your credit history. They want to know whether the person will be able to pay the principal amount, as well as the finance charges with their monthly paycheck. Your repayment is mainly dependent on the paycheck you receive and laws of some of the states allow the people to borrow only a certain percentage of their monthly income. There are different loan sizes available to the applicants depending on the state regulations and the legal maximums. These loans are very expensive when compared to other types of cash loans, but the easiest ones to obtain for any emergency use.
The main requirements for receiving payday loans are that you should be over 18 years of age, you have a regular source of income, you have a permanent address and you have a working bank account. You can enter these details in your online application for a payday loan and you will get the loan approval within no time. The loan amount can range from $100 to $1000 and hence the interest payable will not be a great amount for a loan that has to be paid back within one month.
What are the exceptions to this rule?
The payday money lender will be forced to check your credit history in case the information provided by you on the loan application is not true or if they suspect any irregularities. The lenders may use the credit report to check your identity or to check for any fraud history. If they find that you have given false information on your application or you have lied earlier while taking loans, they may reject your loan application.
Another exception is when you do not have the required income to get the loan approved. In such a case, the lender will make the final decision about accepting or rejecting the loan application after going through your credit report.
The leading bureaus that issue credit reports
If you are a payday loan applicant who needs a credit check, the lending agency will depend on the credit reports issued by leading bureaus like Trans union, Experian, Equifax, etc.
When to opt for payday loans?
Since the risk is high with payday loans as the interest rates are high, one should use them only in emergency situations and after considering their repayment capacity. When you are in sudden emergencies such as medical expenses or paying your auto- repair bills, you can opt for this loan. However, you do not have to keep any of your valuable possessions as collateral to obtain the loan. You will be even able to avoid any debt cycle by using the payday loans wisely to pay your various fees. Many payments come with a late fee and if you cannot have the funds to pay these bills, you will be wasting money paying late fees. A payday loan at the appropriate time can save you the late fees.
Payday loan industry is highly competitive
The payday loan industry has become highly competitive and the loan applicants are getting benefitted by this fact. The fee for issuing loans is going down due to this competition and most of the payday loan customers are satisfied with the service they get from the payday loan lenders. The payday loan system is extremely helpful for those who have a regular income and who are urgently in need of money. If you have the income to pay back the loan amount quickly, then it is the best option to get emergency finance for your unavoidable needs in life.