The smallest requirements for borrowing vary from lender to lender and can be the difference between rejection and approval of your loan. However, there are a few things that will help you get your loan approved.
How to get Approved for a Payday Loan: Check your Credit Rating
Your credit rating is a measurement of your creditworthiness. Something like a barometer of how likely you are to pay back any sum of borrowed money. A low credit score means that lenders are taking much more of a risk by approving your loan application.
People with low credit scores might have no credit history or a poor credit history including missed payments. A good credit rating will improve your chances of getting offered the credit. People with good credit ratings will have a history of borrowing and making their repayments in full and on time.
Improving your Credit Rating to get your Payday Loan Approved
Your credit file (which you can pay just £2.00 to access) shows your credit application and borrowing history. It is worth checking this, to ensure that the recorded information is accurate. Any mistakes on your credit file could affect your application.
You will also want to ensure that you get registered to vote and on the electoral roll. These allow lenders to confirm your identity and address. Moreover is one of the quickest ways to improve your credit score if you are not already registered.
It may take up to 8 weeks for your credit file to get updated, once you have registered to vote.
Tricks to get a Payday Loan: Ensure you Meet the Lending Criteria
Though some lenders trade under different brand names, there are still many different loan providers on the market.
They all have their own product offerings and credit requirements. Which means that shopping around could help you to find the best credit option to meet your needs. If you apply without meeting the criteria you can be certain that it will not get approved.
A set of requirement you must meet to get your loan application approved
To get the best chance of getting your payday loan approved you must meet the following requirements:
1. Meet the basic loan criteria
Credit providers will, first of all, assess your circumstances for risk of non-payment. As such, almost all lenders will need you to be in employment. Also, a UK resident and have a UK bank account in which to pay the money into and recover loan repayments from.
2. Meet the Affordability Criteria
You should take a close look at your personal finances. And make sure your net income minus monthly expenditure leaves you with enough income. Also including rent, food, travel, credit and any other regular expenses.
3. Show Responsibility for your Own Financial Situation
It means that you should not to be in a situation where you have an increasing amount of debt or long-term financial troubles.
If your personal debt is growing it is unlikely that a lender will be confident in lending more money to you. If your debt levels have become unmanageable, a high-cost, short-term loan may not rectify the problem. In fact, it could exacerbate it. Check out the following guide about bad credit loans to understand more.
4. Complete the Form and Pass Identity, Credit and Fraud Checks
Unlike many forms on the internet, a loan application form will often need a large number of fields completed. This is so the lender in question can make a good decision on whether to approve a loan for you. If you do not complete the entire form, or take unnecessary shortcuts, it may raise flags of concern. Thus prevent your application from getting approved. When you might actually pass the criteria had you completed to the best of your abilities.
5. Pay off existing loans first
Lenders avoid situations where a customer may potentially reach a cycle of debt. Taking one loan to pay another loan is not a good idea.
How to get Payday Loan: Shop Around for the Right Option
It is important to shop around before making any applications. Applying for a loan, even if the application is not approved, can affect your credit rating. And it can reduce your chance of approval for future loan applications.
Before applying, look into the least requirements and ensure that you meet the criteria. A payday loan comparison site, or a broker, can help with the process of shopping around.
Cash Lady will send your application approved and trusted lenders and finding the loan that is most suitable for you. This means that you do not need to further damage your credit rating, by making dozens of applications on your own. You will also save time, as you will only need to complete a single form. And you will not need to check the lending criteria on various individual websites.
Have a Good Reason to Borrow Money for Payday Loan Approval
Some payday lenders will ask for details about the purpose of the loan. Why do you need the money? What will it get used for?
Whilst providers of short-term finance are less likely to ask this than traditional loan providers, it may be a question that you will answer.
Any credit should only get used in emergencies, to cover temporary cash shortfalls. You should be confident that you can repay the debt in time. Either as a one-off payment or by instalment if allowed. If you are applying for a loan for an indulgent shopping trip, a holiday or home improvements, you are less likely to succeed.
Payday Loan Tips: Only Apply for What You Need
If you need a £200 loan, you may get tempted to increase this to £250. If you are having a difficult month, it is understandable that you might want to be able to afford a few luxury groceries. Bear in mind that you are more likely to get approved for a smaller loan. So that extra £50 could tip you from acceptance to rejection.
Before deciding how much money you need, seek to reduce spending anywhere that you can. You could shave £50 off the required loan amount. Do this by purchasing cheaper food or budgeting for a half tank of petrol rather than filling it right to the top.
By applying for the smallest loan possible, you can increase your chance of approval. You will also end up paying less interest, which will put you in a stronger financial position through the months that follow.
How to get Approved for a Payday Loan Online: Provide Valid Documentation
Most loan applications get processed online. Which means that there are no phone calls involved and no paper documents required. In some cases, they may need extra information to confirm details or check financial status.
Before getting a loan, check you have available the proof of eligibility that might be requested. This can include a wage slip, bills, and personal identification.
Account aggregation & monitoring
Some lenders now work with services such as Yodlee, for account aggregation. This means you can provide read-only access to your bank account. Giving lenders the chance to check your income and outgoings for a more detailed affordability assessment.
An extra benefit of an account aggregation service is that it allows lenders to track your ongoing financial situation. They may be able to step in and help. More so if you are experiencing financial difficulty, or could delay the collection of a repayment if your salary gets paid late.
How to get a Payday Loan Approved: Consider a Guarantor Loan
If you have a poor credit rating. Or if you do not have a steady and reliable income, you might find payday lenders will not provide the funds you need. In these cases, you may wish to turn to a guarantor loan.
Applying for a guarantor loan increases your chance of approval. Because your loan will get backed by someone else. If you struggle to borrow money yourself, you may wish to ask a trusted friend or a family member to act as your guarantor. Guarantor loans are similar to payday loans. But they will likely have a lower APR as a reflection of the reduced risk involved.
If you cannot afford your loan repayments, the lender can request the money from the guarantor that backed your borrowing. This gives them a second opportunity to collect the money owed. Usually from somebody in a better financial position. The requirements for a guarantor are stricter than the requirements for a borrower. Guarantors are usually required to have a good credit rating and/ or own their own home.
If you are looking for ways to get your loan approved, the most important thing to take away is that you should not rush your application. Although emergency situations cause people to apply as quickly as possible, taking your time might help you to increase your chance of approval.
Key things to remember are:
- Check your credit rating
- Make sure you meet the lending criteria
- Try using a credit broker
- Only borrow what you need
- Have a good reason to borrow
- Check the requirements
- Cut expenses
- Have your documents in order
- Consider a guarantor loan
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