While applying for payday loans, which is considered to be an alternative source of loan other than bank, your credit report is not that important. Also, the loan amount is usually within $1,000 and hence your current income source is the parameter based on which you are given loan rather than your credit score. There are few lenders however may prefer to check your credit score too.
Credit score is the rating that is given by FICO and which is usually between 300 to 850. If your score happens to be below 620, then you are designated with poor credit score. In such case bank or any traditional lender will never prefer to offer you any kind of loan.
As such, your poor credit score will not debar you to get any payday loan however some lenders may restrict your loan amount if your credit score is found to be in lower range. Therefore, people who are seeking bad credit loans prefer to apply for payday loans first in order to meet their urgent financial obligations.
What is bad credit loan?
This is a small amount of loan offered to those who has got lower credit score in order to provide them certain amount of financial relief. Their interest rates may be little higher and also may vary from lender to lender. However, while availing such loan, you must make sure that you must clear the loan quickly in order to avoid paying heavy interest charges. If you continue to default in making your payment then chances are that you may fall under debt trap.
There are few term loans also available, whose interest rates are little less than payday loans and they are to be returned within next 12 months or little more. This loan is also available for the candidates whose credit rating is not so good.
Advantages of payday loans:
- Very easy to apply
You can even make an online application and your loan is immediately approved online and you can meet your financial requirements.
- No credit rating check
Lender will not bother to check your credit report however he would like to ensure that you have a regular salary income.
All your information is protected and encrypted against any third-party intervention.
- Easy approval
If everything is in order then your approval of loan may take just 90 seconds.
- Quick processing
Your loan amount will be credited to your bank within 24 hours.
- Very little paperwork
There is a bare minimum paper work in the whole process.