Being a lifesaver and helping-hand for many (even millennials) nowadays, payday loans may be denied for several reasons. This is why it is important for you to fill the application carefully in the first place. If your application got rejected; we will help you in understanding the potential reasons for the rejection, and ways to fix it below.
Understand the Problems and Reasons for the Payday Loan Application Denial
Before we take the plunge to explain ways to fix it, you first need to understand the reasons and problems for the payday loan rejection. Let’s find out some common reasons for denial.
· Too Many Payday Loans
Generally, payday loans are ideal for borrowers because they are smaller credit contracts. When you are in need of money and send an application to the lender, they have the right to check your credit history as well as the affordability factor. Also, they would see the following factors.
- They will see whether or not you have any other payday loan that you are currently repaying.
- They will also whether or not you have taken out more than one payday loan in the last 3 months.
- They will also evaluate if you are using the current payday loan to repay the other one you have taken before.
Evaluating all three factors closely, they will see whether or not the mentioned factors are true. After assessing them properly, they will then let you know if they can take further steps to grant you a loan or not. Sometimes, lenders reject your application if any of the above listed factors are true.
Another main factor, that becomes one of the leadings causes of application denial, is when you are not receiving any income because of any employment. Lending institutions do assess how you are going to repay the loan. If you are not receiving income, you will either come under the limited terms of lenders or will not be provided a loan at all. This again depends on the lending institution as well as the criterion. If the institution wishes to provide you a loan, their main aspect to for evaluation is the overall and general financial situation of the unemployed borrower. If you do not have financial stability and bad credit history, there are chances that it can reject your application.
· Bad Credit History
In addition to unemployment and having too many payday loans lined up, lenders may also deny your application, looking at your bad credit history. Lending institutions see your credit history in the form of credit scores. If you have a solid history, your loand application will be accepted. if not, you may not get it.
Additionally, if you have had a bad credit history of repayments and experienced some challenges with defaulted loans previously, it would be more difficult to borrow. But if you really require loan, you can also improve your credit history, and that can help you in obtaining a loan successfully.
Don’t Worry, You Can Fix the Denial
You may be really frustrated with the denial of your loan application. Perhaps, one of the factors listed above may be the reasons of rejection. But you need not worry about that. Since you require money urgently and cannot wait, let’s help you explore some quick and short-term fixes for a faster payday loan solution.
· Do Down Payment First
This can help you getting your application approved quickly. When you ask for payday loan, you can make a large down payment. When you make larger payments initially, your monthly payments will be lower, and you will end up borrowing less. Additionally, lenders find this way more convenient as they do not bear high risk. In this way, they may approve your loan even if you have average or bad credit history.
· Pay Off the Debts
As mentioned above, other payday loans or other loans could also be problematic for you. Lending institutions do see how much you spend on the repayments. When you reduce these expenditures, this will reflect your better image in front of the lender.
· Fix Errors
What if there is no problem with your credit history in reality, but they have been made mistakenly? It is necessary for you to fix them. Lenders see the digital copy of your report, and it is possible for there to be errors in it. You should not be held responsible for someone else’s actions and faults. Get those mistakes removed and those errors fixed immediately. When the errors are fixed and the lenders find it appropriate, you will be able to get payday loan.
Here’s What You Should Consider Before You Re-Apply
Now that you know the reasons behind application rejection and a few common ways to fix it, we hope you will fix the errors and re-apply. But before you do that, you also need to evaluate lending institutions and see if they are credible and certified. Additionally, you also need to compare the interest rates, and compare each one of them and opt for the one that you think is the best. Check the multiple FCA authorized payday loan broker options here, take a sigh of relief, and fulfill your needs. Good luck!