The number one complaint about payday loans is their high cost. Many times, the APR of the loan is highlighted. But this is the wrong way to look at these truly short term loans. They are fee-based loans, and the fees can be high. Why? Because the lender's risk is remarkably high, and those seeking these loans have poor credit, to begin with.
They are safe to apply for and easy to do. Some critics believe the high fees associated with these loans should stop you from considering one. However, most people with bad credit have no other options and have already tried other ways to get the cash they need in an emergency. The high fees may actually be less than utility setups, redeposit, and start-up fees or high bank NSF fees if you are trying to cover some checks you issued.
Those who are trying to build or rebuild credit can’t simply get a credit card from a credit card company or lender. Without a credit history, it’s unlikely. A secured credit card that allows you to make a deposit will help build credit.
A good credit score is important when you request for home loans or mortgage loans. It will improve your loan approval chances and help you save on interest rates.
If you keep getting denied payday loans online, you should evaluate the reasons why your loan request is getting rejected. It helps to understand the requirements of a payday loan to determine what factors are preventing you from qualifying for a loan.
The first thing you have to remember is that there are no “guaranteed” loans of any kind. Even payday loans online cannot guarantee approval of your loan request. Tens of millions of Americans need emergency cash each year for unexpected expenses. And, many people have bad credit issues which make it difficult for them to obtain a loan of any kind.
Bankruptcy may help you clear your debts, but it stays on your credit report for up to 10 years and affects your ability to get loans in the future. The lenders won’t approve your loan request if they can see bankruptcy filing on your credit report.
If you want to improve your credit score, you should not use more than 30% of your available credit limit. If you keep your credit utilization ratio under 20%, you will get an excellent credit score.
A credit score is an important factor to qualify for traditional loans. Your credit score determines your credit-worthiness as a borrower. Lenders expect you to have a good credit score as it proves that you are more responsible.
