Payday lenders hardly check your credit score or history to determine whether you should get a payday loan. The payday lenders also don’t report the payment dates; this implies that the credit does not progress.
In the event that you default the payday loan, there will be a damage to your credit since there is a great chance of the bureaus being informed. This is not necessarily reported by the payday lender, but the lender often sells the loan that has been defaulted to the collection agency and hence they might get to know.
The collection agency determines the likelihood of receiving the loan repayment and if the chances are slim enough, the agency might go ahead and report the borrower to the bureaus in charge of credit, this serves to reduce the agency’s losses. But in the event that the agency realizes that the borrower will clear the loan, the agency will most likely desist from reporting to the bureaus in abide to leverage.
The online and store payday lenders always strive to make sure that they receive the money from borrowers, this is because of the obvious reasons that if they transfer the debts by selling them to collections agencies they make very little amounts.
The payday lenders use various methods to make sure that they get the money back: By trying to continuously withdraw from your bank account small amounts of money, this might be futile but it incurs you a fee.
The other contingency plan that the lenders use is trying to call you and your references as they send letters from lawyers.
In some cases, the payday lender will try to negotiate for a reimbursement for a certain percentage of the money they lend.
If the above contingency plans fail to produce results, the payday lender might decide to hire a debt collector. This can be done in a months’ time; this debt collector is also known as a collection agency who is charged with the responsibility of filing a civil suit and informing the bureau. This happens if the money loaned to the borrower is significantly large to attract expenses. This affects the borrower in a negative way as the next move is in a court of law, the court verdict often last for as long as seven years and might lead to confiscation of your assets.
Payday direct lenders or online payday lenders can reject a payday loan in spite of your having a bank account and a source of income. This is often as a result of the following reasons:
- You make an inadequate monthly income. Some payday lenders need borrowers who make $500 or above. This might rob you of the chance to secure a payday loan.
- Most payday online direct lenders have repayment requirements that every borrower is required to satisfy in order for them to be considered. Depending on your location, there are restrictions that regulate the amount of income you can spend. The payday loan lender may subject your monthly income to an algorithm to measure the likelihood of you not repaying.
- Some Payday loans online, verify if you have an unpaid payday loan, this is made possible by agencies that track your payday loan credit.
- If you happen to be in active-duty is a military personnel, the law restricts lenders from issuing you with a loan of more than 36%.
- If you happen to be bankrupt, payday lenders might not lend you a loan.
- Since payday lenders check the borrower’s history, they might deny you a chance on the grounds of having a bounced check.
- The payday loan lenders might deny you a chance to access a payday loan on the grounds that you have not been employed for a substantially long period.
- If you happen to have a bank account that has been opened lately, the payday lenders might deny to lend you funds.