When your application is rejected by credit card and best payday loan companies, it is a good sign to analyze your current financial status. Both types of companies have their qualification standards and they vary between the many different lenders. One credit card company may accept sub-prime candidates while others will reject them. Direct payday loan lenders may reject an applicant based on the amount of monthly take-home income, while another one would freely approve the same loan application.
What scenarios could reject my application with payday loan companies?
Here are the top 5 reasons why responsible online payday loan companies would not approve your loan application.
- No income or not enough – if you cannot afford to pay the loan off, it will only add to your financial troubles.
- No bank account or no direct deposit – A bank account is needed for processing EFT deposits or cashing a check. Responsible lenders will want direct deposits to show that you have stable on-time income. With no credit bureau checks, payday loan companies online will want to see proof that the chances that money will be in the bank come pay off are good.
- Prior short-term loan defaults – Signs that you have already gone bad when trying to pay off other short-term loans is pretty scary for a new lender to trust you with another loan.
- Contact information could not be verified – Online loan company offices may be located a few states away, they need working phone numbers and email addresses to contact customers.
- You have current payday loans to be paid off – These types of loans take a a chunk out of paychecks in order to pay them off. What is left of the paycheck is most usually needed to pay for other regular expenses. Any good lender will note that having more than one other loan out at a time would place more risk factor to them getting paid as contracted.
Credit card companies will not pay attention to a current bank account. They will focus their attention on credit. Application rejections focus on:
- Credit scores – Scores define the creditworthiness of the applicant. Some lender won’t approve those in certain categories or will hike the rates up. These rate hikes make their costs comparable to payday loan costs.
- Credit history
- Not enough income
- Too many new applications
- Credit utilization ratio too high
- Debt to income ratio too high
There are always exceptions, especially companies with poor practices. You have to be aware of company policies before accepting their offer. Credit card companies will offer pre-approved loans with potential start up interest rates, but when you receive yours the contract shows that your credit determined a much higher rate. Some people will be excited just to have a new line of credit and ignore how much it will cost to keep a balance unpaid. Finding a direct lender that will lend more money than others that rejected their application may not be a cause to celebrate. Ask about fees, interest rates, additional costs if the loan is left unpaid before signing the contract.
If your payday loan applications are rejected and your credit score defines you as unworthy of new credit take some time to rework your budget so your income will support life.