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 history with missed payments. A good credit rating will improve your chances of securing credit.
People with good credit ratings will have a history of borrowing. They will also be making their repayments in full and on time.
Improving your Credit Rating to get your Payday Loan Approved
Mistakes on your credit file could affect your application. Your credit file shows your credit application and borrowing history. It is worth checking this, to ensure the recorded information is accurate. Any mistakes on your file could affect your application.
You will also want to ensure you are registered to vote and on the electoral roll. This allows lenders to confirm your identity and address. Moreover, it 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 update, once you have registered to vote.
Ensure you Meet the Lending Criteria
Some lenders trade under different brand names. Yet, 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 be approved.
There are a set of requirements you must meet to get your application for finance approved. For the best chance of approval 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.
You must also be a UK resident and have a UK bank account. This is where lenders will pay the money into and recover loan repayments from.
2. Meet the Affordability Criteria
You should take a close look at your personal finances. Make sure your net income minus monthly expenditure leaves you with enough income. You should also include rent, food, travel, credit and any other regular expenses.
3. Show Responsibility for your Own Financial Situation
You should not be in a situation where you have an increasing level of debt or long-term money issues.
If your personal debt is growing it is unlikely any lender will be confident in lending more money to you. If your debt levels have become out of control, 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 is often longer and more detailed. 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. This could prevent providers from approving your application, despite completing it to the best of your ability.
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.
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. This can also reduce your chance of approval for future loan applications.
Before applying, look into the minimum requirements and ensure you meet the criteria. A loan comparison site, or a broker, can help with the process of shopping around.
Cash Lady sends your application to approved and trusted lenders. This is to help and find the loan that is most suitable for you.
Applying this way ensures you will not 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. Furthermore, you will not need to check the lending criteria on multiple websites.
Have a Good Reason to Borrow the Money
Some quick loans companies will ask for details about the purpose of your loan. Why do you need money? What will you use it for?
Providers of short-term finance are less likely to ask this than traditional lenders. Yet, it may be a question that you will have to answer.
Credit should only be used in emergencies, to cover temporary cash shortfalls. You should also 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 finance for a holiday or home improvements, you are less likely to succeed.
Only Apply for What You Need
It is tempting to apply for more than what you need 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 be accepted for a small loan. So, any extra borrowing could tip you from acceptance to rejection.
Before deciding how much money you need, seek to reduce spending anywhere that you can. 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. What’s more, you could pay less interest. This puts you in a stronger financial position through the months that follow.
Provide Valid Documentation
Most lenders process applications online. This usually involves no phone calls and no paper documents. Yet, they may need extra information to confirm details or check financial status.
Before getting a loan, check you have the proof of eligibility providers may request. 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 provides read-only access to your bank account.
With this level of access, providers can check your income and outgoings. Doing so offers a more detailed affordability assessment.
An extra benefit of this is it allows lenders to track your ongoing financial situation. They may be able to step in and help if you are experiencing financial difficulties. Or, they could delay the collection of repayments if your salary payment is late.
Consider a Guarantor Loan
With a poor credit rating or an unsteady income, you might find 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 can increase your chance of approval. Because your loan is backed by someone else.
You may wish to ask a trusted friend or family member to act as your guarantor. Guarantor loans are like payday loans yet have a lower APR as a reflection of the reduced risk involved.
If you cannot afford your payments, your lender can seek payment from your guarantor. This offers them a second opportunity to collect the money owed.
The requirements for a guarantor are stricter than those for a borrower. Guarantors are usually required to have a good credit rating and/or own their own home.
You should not rush your application when seeking approval for your loan. Emergency situations cause people to apply as quickly as possible. Yet, taking your time might help increase your chances of acceptance.
Key things to remember are:
If you are having trouble getting approved for a loan, you can seek impartial advice by visiting www.moneyhelper.org.uk. If you are suffering with an unmanageable amount of debt, you can seek advice from www.stepchange.org.