Credit checks are important whether you’re borrowing to purchase a home or a car. Lenders will do background checks before any loan application is approved. This is the reason why people with bad credit are hesitant to apply for loans because they might be disapproved. Lenders of payday installment loans will extend you a loan even with bad credit.
A payday installment loan is a short term loan with amounts ranging from $100 to $1,000. How much you can borrow will be based on your credit history and income. Payday installment loans can be applied for at any time but there are specific laws governing when it must be paid off. These loans must be repaid on your next payday within 2 weeks to one month.
So, why doesn’t bad credit matter to payday installment loan lenders? The payment methods used for payday installment loans are the main reason why these lenders don’t mind what your credit rating is. Your credit score doesn’t matter to them if it is excellent or the worse credit score you can imagine. Their payment methods make bad credit scores irrelevant with the approval of your loan.
The first payment method allows the payday installment loan lender to automatically and electronically access your bank account.
Upon access, they will be able to retrieve the total amount due from your account. This is made possible through an authorization signed by you at the start of your loan application. Remember that permitting a second party to access your bank account may be dangerous. So it is important that consumers have adequate money in their bank accounts to cover both your loan and your expenses.
Payday installment loan lenders will know when to access your bank account because they make inquiries when you will be paid from your employer. When you’re applying for a payday installment loan, you might notice a number of specific questions regarding your employment. These allow the lender to determine whether you’re a possible credit risk or not. They will also confirm with your company how much you’re earning.
The second payment method is less risky for consumers but still provides sufficient protection for the payday installment loan lenders. With this method, you issue a check from your own checking account for the total money you borrowed. This check is usually postdated and will only be deposited into the lenders account on the specific date.
Income verification is also another reason why bad credit doesn’t matter for lenders of payday installment loans. By confirming exactly how much you’re earning, the lender will be able to compute the reasonable amount of money that you can borrow.
So, when applying for a payday installment loan, you need not worry about having good or bad credit. If there is something you need to worry about, it is how to make timely payments and pay off the loan easily.