Bad Credit Loans – How Your Application May Get Denied

If you have such a bad credit rating that no bank or credit union would offer you a loan, then one of the many bad credit loans on today’s market may be your only opportunity to cover your financial needs. If you need some extra cash until your next paycheck, are maxed out on all your credit cards and no bank would give you a loan, you may apply with one of the many companies that offer one hour payday loans for bad credit.

Getting denied for a payday loan

Even though these lenders usually accept everyone, it may be that you fall within the 5 to 10% denied applications. Reasons may vary.

• Some lenders won’t accept you if you have just been employed or the company you work for isn’t ‘trustworthy’. In other words, if the payday lender suspects you might lose your job soon, you might be denied.
• If you don’t have a job altogether, chances your loan may be approved are really slim. Most lenders will, however, accept other sources of income as proof you are able to pay back the loan.
• Lenders generally impose a minimum monthly income of at least $1,000. If you fall shortly below this threshold – like earn $980.00 per month – you may be accepted by some.
• If you don’t have a checking or a savings account, chances for you to get a loan are, again, slim. Having a bank account is one of the main prerequisites for getting bad credit loans.

Outlawed payday lenders

Some jurisdictions have banned payday loans for bad credit altogether. Such loans have already been proclaimed to be against the law in several states across the country and, moreover, several analysts have drawn attention on dangers of contracting such loans. Their main argument was about how simple and fast the process is – creditors wire the contracted amount within a day, which can be quite addictive and often leads to an inescapable vicious circle of debt.

Since payday loans are mainly targeted at people with a poor credit history, outlawing them leads to promoting the use of credit cards and paying enormous fees that result from the bad credit rating. As a matter of fact, the interest rate employed by banks for clients with a low score is usually several times larger than the one used by regular bad credit payday loans. This is why experts complain of a “conspiracy theory” – such laws obviously support banks over smaller financial institutions, and enforcing such regulations has a harmful impact on people’s budgets.

Improving your chances to get a payday loan

Most payday lenders have a proven track record of accepting 90% or more applications. However, if you are denied, here are the steps you may try, in order to get a better chance next time.

• If your income is too low – $1,000 or below – try to get a second job. Not only will it help you get bad credit payday loans easier, but you may even save some money so that you won’t need any loans after all.
• Open a checking or savings account if you don’t already have one. There are ways you can get a payday loan even without one, but chances are slimmer.