Bad Credit Payday Loan

When you have a bad credit rating your chances of a successful payday loan application are drastically reduced. However, if you understand how the lenders work and you play by the rules you can get accepted more often than not regardless of your credit history.

What’s more you can actually use payday loans for bad credit repair! Here’s how it works…

Standard practice for the payday lenders is to report to the credit bureaus and red flag your credit rating with a defaulted loan or late payment should you not pay your debt on time. This is to encourage customers to pay the loan back promptly and should you do so then you are not going to have a problem.

What if they were to report to the credit bureaus though when you did pay your loan back on time? Your credit rating would improve each time you paid a payday loan back, improving your credit rating each time until eventually fully repairing it.

The trouble is, there is nothing in it for the lender except more paper work so they don’t bother. That is, until Speed-e-loans realised that by rewarding customers who settled their loan on time with this service they actually drove up business AND saw defaults drop considerably.

Using payday loans for bad credit repair

You can take a loan out with Speed-e-loans for as little as 3 days and they charge just 1% interest per day. Take out a short term payday loan, say 1 week and ensure it is paid back on the agreed day. Speed-e-loans will then file a report with the credit bureaus stating you entered into a loan agreement and settled the debt on time.

It really is as easy as that! Now, we are not recommending you get yourself into debt for no other reason than to improve your credit rating BUT if you do need a payday loan AND you do have a poor credit history then it surely makes sense to use a company that will improve your rating.

Three rules to follow when applying for a payday loan with bad credit

Payday lenders use certain criteria when deciding whether to accept your application or not. By making sure you don’t raise any flags you can ensure you get accepted without any problems. Here’s three rules for first time applicants and if you stick to them you will have no problem getting a payday loan regardless of your credit rating.

Rule #1 – Lenders panic if you apply for more than 30% of your disposable salary. Never try to borrow more than 20% the first time you apply with a lender to avoid raising a flag.

Rule #2 – If the lenders advertising says you can borrow £400 or higher, never apply for more than a third of that maximum amount even if a third is less than the 20% recommended in rule #1.

Rule #3 – Never lie about your credit history when applying for a payday loan. The lenders want your business even if you have a poor credit rating but if they catch you lying (even a small lie) your application will be dead in the water because they will be worried about what else you lied to them about.

The second rule is the biggest mistake people make when applying for a payday loan. We regularly get emails along the lines of “you recommend QuickQuid yet when I applied for their £1000 payday loan they turned me down.”

By asking for the maximum amount advertised by the lender you instantly raise a warning flag and your application will be checked over by someone in authority. Their bonus is on the line if they say yes and then you default so they simply are not going to risk it.

Although the lenders word their ads as ‘borrow up to X amount’ in reality they will rarely loan out their maximum amount to a first time customer – even with a perfect credit rating.

Here’s an example of how the rules are applied: You take home £2000 per month of which £1000 is spoken for with rent, car payment etc. This leaves £1000 so following rule 1 we would apply for a loan of no more than £200 (20%) BUT only if the lenders maximum amount was £600 or more so that we complied with rule 2.

Lets say we find the maximum our chosen lender loans out to first time customers is only £400. If this were the case then we would drop the amount we were going to apply for to £150. Once you have repaid the loan on time and proven yourself as a good customer you will find the amount you can borrow will increase should you need their services again.

Even when they do a credit check it is rare to be turned down by any of the payday loan lenders if you apply the above three rules. If they turned down every application that came from someone with a poor credit rating then they would soon go out of business.

By applying the above rules though, they know they are greatly increasing their chances of being repaid because they have ensured you are not over stretching yourself.

As you have seen, by staying under the radar there is nothing preventing you from getting a payday loan even with bad credit and if you use Speed-e-loans as suggested you can even use payday loans for bad credit repair.