Payday loans are short-term loans that are great for emergency situations. They can provide up to $1,000 within one business day for those times you need quick cash. If you are looking to get a payday loan, you will probably want to know if they check your credit history. Additionally, you should know what other requirements payday loans have so that you can acquire one quickly and easily when needed. You can find all that information in this article.
Credit Checks for Payday Loans
Payday loan lenders usually perform some sort of credit check even if they advertise that they don’t. However, it is often a soft credit check. This means that the credit check won’t count as an inquiry on your credit report. The payday loan itself will also not appear on your basic credit report. Neither the credit check nor the loan will not affect your credit score as long as you repay the loan by the agreed-upon due date.
Every loan lender has specific underwriting criteria that you must meet to qualify for the loan. Your credit history is only one of the factors, and for payday loans, it’s not the most important factor. Among most payday lenders, the most important factor is that you can pay off the loan within a month. To determine this, the lenders will ask for proof of income such as a pay stub.
Here’s the complete list of requirements to get a payday loan:
- Soft credit check
- Bank account
- Proof of income
- Official ID such as a driver license
Getting a Payday Loan With Less Than Perfect Credit
It can be difficult to get an installment loan or credit card with a low credit score. If you are approved for one of these long-term options, you may have a high-interest rate. With a payday loan, a low credit score won’t necessarily keep you from getting approved or result in higher loan fees.
Payday loan lenders check your credit history to help them get an overall picture of your ability to pay back your loan. Every lender is different and credit history may be a more prominent factor to some lenders while others may not consider it at all.
If your credit is downright poor or you have recently been rejected for a payday loan, consider requesting a loan through a matching service such as GreenStarCash. With a matching service, your credit history is only checked once, but the service sends your loan request to several lenders to increase the likelihood that the loan gets approved. These matching sites usually have access to hundreds of lenders, and they will choose the best ones for your situation.
Credit Score Needed for Payday Loans
Knowing your credit score before you apply for a payday loan can give you an idea of whether you will be approved. You can check your credit for free at CreditKarma.
There is not a specific credit score required to get a payday loan, but there are general ratings for each score. The table below explains how each rating is perceived by loan lenders:
|Score||Rating||Loan Approval Chances|
|Under 580||Poor||Unlikely to be approved for large loans, but may be approved for a payday loan|
|580 – 670||Fair||Likely to be approved for a payday loan|
|670 – 740||Good||Likely to be approved for short-term and long-term loans|
|Above 740||Excellent||Highest chance of approval with lowest interest rates|
How Payday Loans Affect Your Credit Report
Because payday lenders run soft credit checks rather than hard credit checks, the loan won’t appear on your standard credit report. However, if you apply for a large loan such as a mortgage, lenders may be able to see short-term loans including payday loans on your credit history. Some mortgage underwriters may be more hesitant to approve loans for people who have payday loans on their credit history in the past year.
If you can’t pay the loan back in full by the deadline which is usually two weeks to one month from the day the loan was given, you may be able to extend it for an additional fee. Make sure to speak to your lender as soon as possible if you are unable to pay back the loan by the deadline. Otherwise, the lender may report it to a debt collector which could negatively affect your credit score and your ability to acquire a loan in the future. Having a debt sent to collections may impact your credit report for up to seven years.
Payday loan lenders check your credit history using a soft credit check, but your credit score is not a prominent factor in the decision to approve your loan. As long as you can provide a pay stub or other document to prove your ability to pay back the loan on time, you have a good chance of getting approved. So, don’t let a poor credit score stop you from applying for a payday loan if you need emergency cash.