Payday Loans for Bad Credit Record: Boon or Curse?

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Having a bad credit record is like stepping on gum; no matter how hard you try to get rid of it, it always sticks to you like magnet. Surely, once you have got your credit rating spoilt, it becomes very hard to regain the trust of the lenders.

People with bad credit histories have been always left behind when it comes to applying for loan. The reason for this is that no financial institutions like banks want to lend them money. Of course, they don’t want to risk losing their money. Then what should such people do? What if you have a bad credit record from the past and you get into some sort of financial crisis where you need to arrange a loan? Of course, you can always go to your friends or family members for help, but you may not want to opt for that option. So how will you get a cash advance? The answer is payday loans!

Introduction to Payday loans for bad credit history

There are several reasons why payday loans are popular in the UK in spite of their high interest rates. One of the major reasons for the popularity of payday loans is their easy availability to the people who have less than perfect credit ratings.

There is a common misconception here. They are not 'payday loans regardless of credit history' they are for people with a bad credit history. What is the difference? Well regardless of history may mean every piece of credit you have has gone bad and you are still defaulting on loans left right and centre. A bad credit history could be a loan taken 3 years ago and then lost your job went bad 'hence the bad history' but since you have paid back a couple of loans on time. The latter case would be considered (along with affordability) whereas the former would not be lent to by most lenders. 

Payday loans are short term loans that are given out to salaried individuals who have a steady employment status. These loans are meant to be repaid on your next payday or within 14, 21 or 34 days as stated in your loan agreement with the lender. For this, your bank account and debit card details are taken by the lender. On the date of repayment, the loan amount plus interest is automatically debited from your account to repay the loan.

How do I take out payday loans for bad credit?

The procedure to apply for a payday loan is extremely simple. All you need to do is to go to the payday lender of your choice and fill up the application form. Next, once your application gets provisionally approved and you submit all the documents that are asked for, the loan is processed and IF agreed to the money is deposited into your account on the same day and in just a couple hours in most cases.

Behind the scenes a lot is going on. Credit files are checked, affordability is checked, your ID and bank are checked. So please please do not beleive that just because the application is simple and the loan for a small amount that they are not treated as seriously as a bank loan.

 

Are payday loans good for borrowers with bad credit record?

The answer to this is not a simple one. As mentioned above, it is all about credit HISTORY, and in this case history goes back 6 years. If you are still not financially sound and still struggling to pay you debts then no loan is good for you whether you have a bad credit record or not. On the other hand if you had a bad spell a while back an dnow have your life sorted and your debts under control and need a shor trem loan, which may not be possible from a bank, then a payday loan for bad credit may be very valuable to you. You must ensure whatever you do that you can afford to repay it, otherwise your credit record is in for another trip down the duldrums.