If you find yourself in a financial emergency, you may look at getting a same day loan. With their high approval rates and options for bad credit loans, you may feel secure in your application. However, there is still a chance your application can be rejected. Let’s discuss why people can be denied a payday loan.
Regular Borrowing
If you already have a payday loan, your new application will most likely be rejected. This is because the lender can see that you’re already in debt with another company and you could be using this loan to pay off the other one. This shows you aren’t able to afford your newly requested loan. When your application is sent, the lender may see that you’ve been regularly borrowing money too. This can be a red flag to them in terms of your income being stable. You want to show that not only can you afford to pay it back, but that you’re not always relying on loans to help with your finances.
Your Credit Score
When looking at your credit score, the lender wants to see that you’re able to afford the repayments and make them on time. If you have a bad credit score, this can have a very strong effect on your application. A low credit score shows that you’re not able to keep up with your current repayments, so a new potential lender will see you as too risky to lend to. Alternatively, you may not yet have built up a credit score. This could be because of your age, or you haven’t used other financing options in the past. Again, this may cause the lender to deny your application as they deem you not secure enough to lend to.
You Don’t Meet The Criteria
Each lender will have different criteria when you apply. For example, some payday loans aren’t available to those under 21, or if you’re unemployed. Even if you have a great credit score, if you don’t hit the required criteria, your application will be denied.
Affordability
Apart from your credit score, a lender will look at your actual affordability. They may request bank statements to demonstrate this. If your income isn’t enough to cover the repayments, or only just covers them, you may be denied a payday loan. Lenders will also check to see if any of your regular payments such as direct debits have failed recently. This could mean that you’re unable to afford your current payments, so you won’t be able to repay your loan. If you’ve also filed for bankruptcy, your application will most likely be denied too, as again this proves you’re not able to repay the lender.
Gambling Payments
When checking your current financial situation, if a lender sees that you make regular payments to gambling websites, they may deny your application. Making multiple payments to such places, you can be deemed too high risk to lend to.
There are many different reasons why your application for a payday loan will be rejected, and some of the reasons might not be an easy fix. To ensure you have the best chance of being approved, you’ll need to meet the criteria, prove your affordability, and have a fairly decent credit score. When armed with these on your application, you can feel more confident in your chances of receiving approval.
