If you have recently Failed a Credit Check for a payday loan you may well be wondering why. The answer is not straight forward but in this post I will look at some of the reasons why your application may have been declined.
Payday Loans are an expensive way to borrow money so you may have had a lucky escape. I know this from personal experience, payday loans are one of the few places I could go to borrow some money, even with a poor credit score. However because of what happened to me a number of years ago now, I won’t go near them again.
That being said you are here to find out why you failed the credit check so let’s get on with finding out.
Reasons why you could have Failed a Credit Check
Below we look at some of the reasons why you could have failed a credit check for your payday loan.
You are not on the Electoral Roll
The electoral roll is an important part of the credit check as it allows a lender to check you are who you say you are. Not being on the electoral roll could well be a reason why you have failed the credit check. In fact in most cases not being on the electoral roll will cause an automatic fail.
You already have too much Credit
Payday Lenders had to tighten up their lending policies recently as they were not found to be carrying out proper affordability checks. When your credit report was checked, they will have looked at your other credit commitments. If you have too many you may fail the credit check due to affordability.
You already have other payday loans
If you already have one or more payday loans then this will most likely have caused you to fail the credit check, assuming the other lenders are reporting these loans to your credit file. Not all of them do.
You have recent defaults or late payments
If you have some very recent late payments or defaults registered on your credit report, this could have caused your credit check to fail. Payday loans are usually quite easy to get so you may still pass despite the above.
You have a large number of credit searches in a short space of time
If you have been frantically applying for credit then this is a potential warning sign that you are struggling financially. This could put off potential lenders. If you continue to apply you will only do further damage.
You made a mistake on the application form
If you have made a simple mistake on your application form, such as spelling your name incorrectly or your address wasn’t quite right, this could well have caused you to fail the credit check.
What can you do?
Assuming this wasn’t a case of a mistake on the application then there are some things you should consider doing in order to find out why you failed the credit check.
The first thing you should do is to consider checking your credit report. That way you can see for yourself if anything on there is to blame for you failing the credit check. You can also work out a plan to begin to improve your credit score if you know what you are up against.
If it is the case that you are struggling financially and have been applying here there and everywhere then definitely stop. If you are in financial distress and are not sure where to turn to, consider contacting organisations such as StepChange Debt Charity or Payplan to get some advice.
Some lenders may accept you whilst others may reject you. Each lender has their ideal customer in mind and if you fit the bill your in, if not then you may be out of luck. This doesn’t mean every lender will reject you but on the flip side, making too many applications in a short space of time could also cause you problems so be careful.
Will things improve?
Absolutely, providing you maintain your payments to all your existing credit commitments and pay down your debts. The key thing with your credit report is that it takes time for it to get better.
Checking your credit report every now and then is always a good idea because you can see for yourself what it looks like and spot any potential problems and sometimes even some mistakes.