Payday loans may be beneficial to individuals that are struggling with paying their bills. This type of loan is usually for less than $2,000 and has to be re-paid rather quickly, which is quite different than a signature based loan program that generally has a longer repayment period with lower interest rates..
The application process can be completed online in less than ten minutes. Because this is an extended line of credit there is often credit checks conducted before approval is granted for the loan. Applicants are required to list their names, addresses, telephone numbers, date of birth, checking account numbers, Social Security or tax ID numbers, employers name and address and monthly income.
Individuals who do not make at least $800 per month or do not have a valid bank account will be most likely be denied a payday loan. Because these loans have to be paid back quickly, it is essential for individuals to only borrow funds if they know they can pay it by the deadline.
Some payday loan lenders conduct a soft credit pull for qualifying. This terminology can often confuse consumers. What this means is that the credit check does not turn up on a person’s credit history. Whenever credit inquiries are made, they are listed on a person’s credit report these are referred to as hard credit checks. Typically they are done by banks and credit card companies to verify a person’s identity and retrieve their credit score.
When a payday loan agency evaluates someone’s credit score they want to see how many credit checks have been conducted on them in the last few months. The more checks that are done by financial institutions, the worse this appears to them.
People who apply for multiple lines of credit frequently often do so because they have been denied credit in the past. Creditors do not like to take a lot of financial risks. When they observe that other lenders have denied someone credit then it makes them less comfortable when approving a loan for someone.
The great thing about soft credit checks are that they allow individuals to seek out payday loans from various lenders. If someone is for some reason denied a payday loan, then they can move on and seek out funding from another lender.
When evaluating payday loan lenders, it is important to seek out lenders that conduct soft credit checks instead of hard ones. There are typically credit score criteria in place so asking beforehand can be beneficial. Most people know what their credit score is so it can be helpful to know in advance if the qualifying requirements have been satisfied.
When selecting a payday loan lender to use, soft credit checks can be very useful. Each lender has different interest rates and fees so being able to apply for multiple loans without being penalized with the three reporting credit bureaus is an excellent advantage to have.