There are more people today with bad credit ratings than ever before. In a recent study by the Corporation for Enterprise Development, it was found that the majority of Americans, 56% to be exact, have poor or subprime credit scores.
With low credit scores, it can be impossible to get credit, or to get credit at an interest rate that is reasonable to be able to pay back. It may be possible to use some credit cards, but they will be at extremely high interest. Banks tend to avoid lending to people with bad credit, and even people in the middle class with collateral for traditional types of loans may find it hard to get money for emergency situations through traditional lenders.
If you have bad credit because of a foreclosure, bankruptcy, late or unpaid bills or because of divorce, medical expenses or other situations, bad credit payday loans may be able to help.
No Credit Check, No Collateral Needed
Lenders offering bad credit payday loans don’t rely on credit scores to determine approval for their loans. Instead, they look at the applicant’s employment and income, and base approval on those factors along with a current, active checking account.
A payday loan is also not backed by collateral, your next check that is direct deposited into your account will be used to automatically pay the principal and the fees to the lender.
It is important to realize that a payday loan is not meant to be an additional source of income. Rather, it is an advance on your next paycheck, and it will be repaid in full from that check.
How Much to Advance
When considering bad credit payday loans, only request the amount needed. This helps to not only reduce fees for the advance, but to also limit the amount that will come out of your next check.
Often people who have trouble with these loans take a large advance, spend the money, and then have nothing left of their next check. This creates a constant deficit and becomes counterproductive to their financial well-being.
Before determining how much you need in the advance, consider what you need to pay out of your next check for essentials. The balance of the check could be used to repay the advance while still allowing you to meet your current financial obligations. Remember also the lender will charge a fee for the advance, which will also need to be paid back based on the amount borrowed.