Could payday loans prevent some consumers from receiving a mortgage loan? A sub-prime lender in the U.K. has taken a stance against lending money to customers who have taken out a payday loan within three months of applying for a home loan. A sub-prime lender gears their loans to include those with tarnished credit. Since many customers with similar credit will also turn to low cost payday loan companies for small loans, extra thought will need to be put into future lending opportunities.
This information does not apply towards American customers, but it is food for thought. It relates back to being responsible with finances and taking preventative measures to keep you out of debt. One company thus far is looking at those who use payday loans online or even store front locations for financial help, is deciding that those applicants have too much financial stress. The customers may have paid the payday loans back on time with no problems, but the message reads the same to this particular company.
Other lenders were asked whether or not they would follow suit with declining loans based on payday loan usage, and all replied that it would not be a part of their loan process. So what does this mean for the future of American payday loan customers? Probably nothing, but it is always good to keep in mind that online payday loans and brick and mortar lenders are not your only choice for financial assistance. This is the message the one U.K. lender is trying to make clear.
The majority of lenders will look for more than payday loan information for approval.
Larger loan companies may use unpaid payday loans as a reason to deny an application. With this said, any type of default with any type of creditor or lender will get an application denied. Having multiple loans out at one time will keep a new loan from being processed. It is easy for reports to focus only on the direct payday lenders, but a combination too many loans of any kind can prevent approval. It boils down to debt to income ration and how well you take care of your finances. If you plan on buying a home, it is imperative that you keep your finances clear of negative reports and your debt to income ratio low months if not at least a year before you start applying for home loans.
Protecting your financial future is extremely important which is why the states got involved with regulation of the direct payday lender. Too many individuals were falling deeper into debt when using these short-term loans and the state governments got involved to protect their residents. Responsible lenders will deny applications if the customer’s credit, or with online payday loans banking information, is showing negative activity.
I am a Blogger, Web Content Writer, Teacher, Mom. A woman of many hats. As an elementary teacher, I had always encouraged my students to write more. I find myself falling back on my own teaching techniques to share what I know about building and rebuilding personal finances.