The no credit check payday loans myth

The truth about how your loan application is delt with

There is a prevalent myth in the loans business that payday loans UK do not require a credit check but this is not strictly true. Most pay day loan companies carry out a credit check in order to confirm the identity of the applicant without having to ask for faxed documents or other proof of identity. It is required to speed up and streamline the application process and to ensure that the application follows official guidelines. So whilst there is a myth about 'no credit check payday loans', payday loan companies do, in fact, usually run credit checks.

The difference here is that the purpose of the credit check is not to assess the applicant's finances to determine how suitable they are for the loan. Rather, it is to confirm that they are who they claim to be and to establish that they have a permanent UK address. If you see no credit check payday loans advertised, then the company is trying to make it apparent that they are willing to accept applications from those with poor credit ratings.

Accepting Poor Credit Ratings

The reason that some payday loan companies are happy to accept applicants with poor credit ratings is that they only need to be assured that the borrower can pay them back when they receive their next salary payment. With traditional loan companies requiring a borrower to pay them back over an extended time period, other factors such as earnings and past credit behaviour come into play. An ordinary bank or lender can see how trustworthy an applicant is by checking their credit file.

Payday loan companies simply need the assurance that no matter what the applicant's history, they will pay back their payday loan when their salary hits their bank account. Whilst traditional forms of lending will require a standing order or a direct debit, payday loans are generally repaid through a charge to the borrower's debit card, drawing the funds straight from the current bank account associated with the card.

So, while payday loans without credit checks are largely mythical, because payday loan companies need to confirm an applicant's identity before they can process the loan, the myth is in part true in the sense that people with poor financial track records could still be eligible for a loan from a payday loan company, even if they can't get a credit card or other form of borrowing.

Improving Your Credit

If you are thinking of a payday loan as a way in which to improve your credit rating then it could be a good option. Each time you pay back the loan you will get a green, positive mark on your credit report showing you stuck to your part of the bargain. This means that even though loans are advertised as: no credit check payday loans, they do in fact involve credit checks and on top of that can even improve your credit rating - but only if you pay them back on time.

As part of our responsible lending, we make sure that all the information about our payday loans are as clear and transparent as possible. This is partially so that you know what's happening, and also so that you can properly plan what you borrow. We do not want anyone to find themselves in financial difficulty as the result of taknig out a payday loan, so please do make sure to borrow only what you know you can comfortably afford.

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