Payday loans are known generally a respite to those bearing themselves down with bad credit scores and a spotted credit history. While they are a silver lining when the cloud of cash shortage looms over us and payday loans are not an impossibility, a borrower should be aware that whether we like it or not; a bad credit score can negatively affect our capability to get a payday loan. Here are five ways we can get a payday loan with a bad credit history.
Payday loans are sometimes called as bad credit loans for a reason. Direct payday lenders, given the short loan term and loan amount, are willing to part with the credit by charging a relatively higher cost of borrowing. This is justified as the lender is taking a higher risk lending to high risk borrowers and in case of defaults on some cases, he can always recoup the amount from other borrowers. Works out as a win-win in the case of borrowers who need immediate cash.
This isn’t a quick solution but a permanent one. Sooner or later, a bad history is bound to catch up with you. To start with, get a hold of your credit report. Sometimes the solution can be as simple as checking for errors in your report in terms of your repayment history as this can make a huge difference. Further, make a concrete plan to reduce debt, pay your bills on time and avoid applying for credit when you can manage by taking up a few extra gigs.
One idea is to go the traditional route in getting a payday loan by pawning an underlying asset. This would mean talking your direct payday lender into customising your loan and making him agree to lend in exchange for lien over your assets. You could opt to keep a car, jewellery, heirloom antique items or your cabin as a collateral. Of course, do ensure that you would have the cash ready in time to avoid losing your assets.
Novel but worth a shot. Bad credit history mostly comes into play when a borrower starts leaning on extensions to delay repayment. However, if there are means to assure the direct payday lender that you will not be asking for extensions and may be sign a document which says so, it might help in building trust and in getting an approval on your payday loan.
Credit scores for traditional loans are published by agencies like TransUnion, FICO or Experian and these use data on the loans you borrow from banks or financial institutions. They typically cover loans like mortgage, car loans, credit card debt and bill payment history. Often casual short term loans like payday loans are out of their ambit. If your scores there, are bad, you could suggest your lender to check reports by the likes of Teletrack which cover short term loans. Higher scores there could increase your chances of getting a payday loan.
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