When you request a payday loan, installment loan online, or other short-term lending option, you will likely be subjected to a few basic checks to ensure that you are eligible for the loan and that the lender believes you can afford to repay the amount.
Read along as we explore how basic checks are carried out and other important details.
Along with checking your personal details, a payday lender will also take a look at your credit history.
What checks are carried out when I apply for a payday loan?
There are only four requirements to qualify for a payday loan.
- You must be a US citizen.
- You must be at least 18 years old.
- A recurring monthly income of at least $800 is required.
- You must have a checking account.
Apart from the requirements, lenders look at a variety of your personal information as part of a credit check to ensure that all the information you supplied on your loan application is accurate. These details include:
- Name, Age, and Address
- Phone Number
- History of payments
- Default history
- Unpaid debts
- Loans, mortgages, phone bills, and credit cards
- Accounts you have with other people or that they have with you, like checking accounts, mortgages, and more
Is a credit check performed when applying for a payday loan?
Yes, most payday lenders will perform a credit check when you apply for a loan. By performing a credit check, the lender can evaluate your creditworthiness and decide whether you’d make a good loan applicant.
This usually entails looking at your credit report and history to determine how you have handled credit. The lender will use this data to decide if to accept your loan request and, if so, how much money they will loan you and at what interest rate.
When a credit check is completed, a credit footprint is left on your credit report; however, most payday lenders simply leave a soft credit imprint, meaning that your credit score is unaffected in any way. On the other hand, a hard search may be conducted in some cases, which will remain on your credit report for up to 12 months.
What does a hard check involve?
A hard credit check happens when a lender or financial institution reviews your credit record to determine your creditworthiness for a loan or other credit product. This may have a negative effect on your credit score.
A soft credit check, on the other hand, has no impact on your credit score. A hard credit check is typically carried out when you apply for a loan, credit card, or another type of credit instrument.
Lenders may use the results of a hard credit check to determine whether to accept your loan request and, if so, how much money they should grant you and at what interest rate.
You can see your credit report and credit score to see which hard inquiries have been made on your account. Additionally, you can minimize the adverse effects of hard inquiries on your credit score by limiting the frequency with which you apply for credit and shopping around for the best prices and conditions.
Can I get a payday loan with no credit check?
Getting a payday loan without a credit check is unlikely, and many lenders do not offer them. Credit checks will only affect your credit score a little, so if you do not have a good credit score, it could be wise to look into alternatives to payday loans, like borrowing from friends and family. Repaying your payday loan late might have serious consequences, so it is always advisable to ensure that you can make timely payments before asking for a loan.
Summary
When you apply for a payday loan, the lender will run a few checks to see if you qualify for the funds. As part of these checks, your personal information, such as your name, address, and job status, may be checked. Your credit history may also be looked at.
A credit check is required in order to obtain a payday loan. In order to assess how much you can borrow and how long you would have to repay it, the lender may also want you to provide documentation of your income, such as paycheck stubs or bank statements.
To verify your work status, the lender may occasionally request references or contact your company.
When you apply for a payday loan, it’s essential to be honest, and give accurate information. If you don’t, your loan application could be turned down.
