If you find yourself in need of a payday loan online, chances are that you might be in a tough spot right now. It’s an unfortunate fact of life that sooner or later everyone gets hit with unforeseen circumstances that require swift action. Unexpected life events like medical emergencies, car repairs, or loss of income are just a few of the common reasons people search for payday loans online.
Getting quick access to funds can be even more difficult if you are struggling with a bad credit score, but bad credit is more common than you might think. In fact, according to Experian, 33% of Americans fall into the category of subprime borrowers. That means that approximately one out of three Americans has a poor credit score.
If you’re one of the many Americans looking for a payday loan online with bad credit, you should know that you are not alone.
Securing a Payday Loan With Bad Credit
Payday loans are a solid option for borrowers with bad credit because payday lenders generally take additional facts into consideration when deciding whether or not to approve your application. Additionally, an online payday advance is different from other types of personal loan options. In most cases you’ll give the lender direct access to your checking account to withdraw payment from. This extra step helps the lender to feel more comfortable when it comes to accepting payday loans online for bad credit borrowers.
If you’re looking for payday loans online with bad credit, we’ve put together the following guide to help fill you in on everything you need to know in order to acquire the funds you need.
How Online Payday Loans Work
There are numerous names for payday loans, but most work in a similar way. They may be called deferred deposit loans, post dated check loans, cash advance loans, or check advance loans. However, most require that you give the lender a postdated check or permission to draw the payment from your bank account electronically on the due date.
In the majority of instances, loans of this kind are due for repayment in approximately two to four weeks, or on your next pay date. If you do not repay the loan and requisite fees that are attached, the lending institution can either proceed to cash the postdated check you gave them or automatically draw the payment from your checking account. Some states have set limitations for payday loans and the fees associated with them, but these rules vary from state to state.
Bad Credit Explained
Many lenders use the FICO scoring system to determine how likely it is that you will repay your loan. The score typically falls between 300 and 850, and the “bad credit” range is usually between 300 and 620, with 300 being the worst.
Consumers with a credit score of less than 620 may find it difficult to borrow from lenders that rely heavily on the FICO score to determine credit worthiness. Numerous aspects are factored into this scoring process, including the following:
- Missed Payments
- Collections and Defaults
- Bankruptcy
- Repossession and Foreclosure
- Maxing Out Credit Cards
Credit Repair Basics
Getting a payday loan online can help you get out of a jam in the short term, but you’ll still need to address the root causes of your bad credit. Here’s a crash course on credit repair:
Check Your Credit Report
The road to repairing your credit begins with getting a copy of your credit report. The Fair and Accurate Credit Transactions Act is a law that entitles you to receive free annual credit reports from any of the three major credit reporting agencies; TransUnion, Experian or Equifax. Once you have your credit report, it’s important to examine it thoroughly for any mistakes, or traces of fraud. If any discrepancies are found, make sure to file a report directly with that credit reporting institution as soon as possible.
Credit Repair Services
While it might sound appealing to hire an agency to make some of your credit mistakes disappear, the reality is that the role of a credit repair service is to search your credit report for inaccuracies that they can report to the credit bureaus to have removed from your credit report.
If you think that your credit score is being impacted by inaccuracies or fraud, a credit repair service can be very helpful. However, this is an industry known for scammers, so make sure to research the reputation of any credit repair company that you might consider hiring.
Healthy Financial Habits
For some people, the only thing that can fix their credit is time and paying down outstanding balances. If you haven’t already set up a budget to track your income and expenses, that should be your top priority.
Examine your expenses and be real with yourself when analyzing what you need and what you want. Can you identify any expenses that you can cut? If there’s no wiggle room in your expenses, you may need to find ways to make more money by applying for a new job, or finding a side hustle.
An can also be a step in the right direction for a person with bad credit. Paying back your balance on time will help to build your credit score, and since the terms of the loan requires access to your checking account, your payment can be automatically debited without you having to worry about missing the deadline.
What You’ll Need to Apply
Applying for a payday loan online with bad credit is a very quick process. You can use a computer or mobile device to complete the application, and you are typically notified of the lender’s decision within a few minutes. In most cases, if your loan is approved on a weekday before 5 pm PT, funds can be deposited into your account by the next business day.
How quickly you will be able to access the funds will be dependent on how quickly your online payday lender can process the transaction. You may need the following to apply:
- Your full legal name
- Social security number
- Driver’s license number
- A checking account capable of accepting electronic transfers
- A current phone number where you can be reached
- An active email address
Will Online Payday Lenders Check My Credit Score?
In most cases, payday lenders have some type of verification process regarding the applicant’s credit, but in most cases, hard credit checks are not necessary. Rather, lenders of this type often go by the consumer’s income to make a decision about whether or not the person is a good loan risk.
A Final Word on Bad Credit Payday Loans Online
It’s common knowledge that bad credit can send a ripple effect through your life. It makes a lot of things, a lot harder.
Acquiring loans, getting a new job, and finding low rates on auto insurance are just a few of the ways that less-than-stellar credit can impact your everyday life. Which is why it’s particularly scary when you have bad credit and you find yourself in a sticky situation that requires quick access to cash. A lot of times, the folks with bad credit are the very people who need a helping hand the most.
If you’re trying to improve your credit score, there are multiple credit repair techniques that can help you to get back on the right track.
Frequently Asked Questions:
1. Why might someone need a payday loan online?
Individuals might seek payday loans online for various reasons, including unexpected life events such as medical emergencies, car repairs, or loss of income. Quick access to funds is often crucial in these situations.
2. Can individuals with bad credit qualify for payday loans online?
Yes, individuals with bad credit can often qualify for payday loans online. Payday lenders typically consider additional factors beyond credit scores when deciding on loan approvals, making them a viable option for those with poor credit.
3. How do online payday loans work?
Online payday loans, also known as deferred deposit loans, cash advance loans, or check advance loans, typically involve providing the lender with a postdated check or permission to electronically withdraw the payment from the borrower's bank account on the due date. These loans are usually due for repayment in two to four weeks or on the next pay date.
4. What is considered "bad credit," and how is it determined?
"Bad credit" is often associated with credit scores ranging from 300 to 620 on the FICO scoring system. Credit scores are influenced by factors such as missed payments, collections, defaults, bankruptcy, repossession, foreclosure, and maxing out credit cards.
5. How can one repair bad credit?
Credit repair involves checking your credit report for errors or fraud, filing reports for any discrepancies, and adopting healthy financial habits. This may include budgeting, identifying expenses to cut, and paying down outstanding balances. Credit repair services can be considered, but caution is advised due to potential scams in the industry.