Most of those who choose to take out payday loans do so because they have an immediate expense that needs to be immediately paid. From urgent travel needs to emergency medical bills, these are the types of issues that require quick payments and even quicker loan processing. While many consider these loans to be a sure thing, there are those who are turned down by payday lenders. If you are considering taking out a payday loan, you may want to consider the reasons why a lender might choose to work with you.
Perhaps the most common reason that a lender might not extend a payday loan to a potential client has to do with one's credit score. This can be somewhat confusing, especially as payday loans are usually taken out by those with low credit scores. While it's true that payday loans are generally more lenient when it comes to credit scores than more traditional lenders, there is still a limit in place. Simply put, those who have extremely poor credit are not likely to get a loan from any reputable company.
If you put yourself in the shoes of the lender, this makes perfect sense. After all, a poor credit score shows that a client is more likely to default on a loan and thus can cost the payday lender not only potential profits but also its initial investment. Given that the payday loan company needs to get paid back to stay in business, there are relatively few that are going to go out on a limb and work with an individual who is indicated to be a major risk. Doing so would quickly drive any lender out of business.
What should you do if you find yourself with too low of a credit score to take out a payday loan? In most cases, your best bet will be to get a co-signer. Working with someone who has a slightly higher credit score might be the best way to get a loan, especially if you have a very low score. If you don't have a good co-signer available, you might need to look into loans that will allow you to offer collateral. These loans generally have lower minimum credit scores because the lender has a better chance of recouping its money.
Even those with credit scores that are within the typically acceptable range can be turned down. Rather than just looking at a score on its own, some payday lenders will look at where your debt comes from and why you've had such a difficult time repaying what you owe. If you look like you have a history of failure to pay off your debts, it's very unlikely that a payday lender will be able to work with you. Again, this is a matter of getting denied because you present far too much of a risk for the lender.
It should be noted that some lenders are specifically looking for your history paying back loans. While issues like medical debt can hurt you when working with a traditional lender, many payday companies will be more concerned about the debt that you've accrued by choice. If you have a history of failing to pay back loans or skipping out on your credit cards, you quickly become a dangerous person to deal with in the lending business. Burning one company is a good way to get turned down for all payday loans in the future.
If you know you're going to need a payday loan soon, your best bet is to try to get your current debts settled. If you can't do that, you'll once again need to work with a co-signer to try to make your application look more attractive. If all else fails, you can speak directly with your potential lender to explain why you have a significant amount of debt and a poor payment history, while also taking the time to explain why you will be able to pay back this loan when so many others still remain unpaid.
Lending is an industry that thrives on honesty. Those who take out loans need to know that the lender is trustworthy and presenting its products honestly. Lenders, by the same token, need to know exactly with whom they are dealing. Every payday lender has its own paperwork, but all of them require that you disclose facts about yourself and about your income. If you fail to disclose certain facts, you'll absolutely be turned down for all payday loans. If you put in false information, you'll be in the same situation. Those who fake their personal information are usually caught and denied a loan.
Again, we're looking at situations where your choices could put the fiscal future of the lender in jeopardy. While mistakes are made, most lenders tend to err on the side of caution. After all, a person who enters false information is often a person who could skip out on payments or even fail to pay back a loan at all. Falsifying information also means the lender cannot assess the risk you present to the business, nor can it decide how much of a payment you can really afford. If the lender can't know the real you, it won't deal with you at all.
There really isn't any way back from fraud. There is, however, a great deal you can do if you feel like the lender brought back the wrong information or if you made a mistake on your paperwork. If you have made an honest mistake, make sure to alert the lender and backup your new information with the relevant paperwork. If the mistakes were on the lender’s side, make sure to bring in paperwork that corroborates your story. If you can show that you're not trying to defraud the lender, the company will be much more likely to work with you.
Finally, there's the possibility that your lender is actually unable to issue a loan. A lender runs a business, after all, and it cannot lend what it does not have. It may have a policy of only lending out to a certain number of individuals at a time, or it might have overextended itself and now has no ability to issue new loans. No matter what the case, the problem may not be with you. In these cases, you aren't being denied because the lender has a problem with you. Instead, you've run into a major issue on your lender's end.
There's not really much you can do if an individual lender is overextended. You can certainly check back again in a few weeks to see if the lender has resumed normal services, but this might be too late. Instead, your best bet will be to move on to a new lender. It's fine to circle back to the overextended lender if you find yourself in need of a loan in the future, but it's best to cross this company off your list for the short term.
There are many reasons why you might be denied for a loan. Your best choice is always to be honest about your personal information and your ability to pay and then to work from there. If necessary, bring in a third party to vouch for you and to share responsibility for your loan. While it can be frustrating to be denied, try to remember that this too may only be a temporary issue. If you're willing to put in some work on your credit score and to catch up on your older debts, you may find yourself in a better position to borrow in the future.