Payday lenders have few approval requirements. Most do not perform a credit check or even require that the borrower have the means to repay the loan. Usually all you need is an ID, a relatively good bank account, and a fixed paycheck. Yes, even Net Pay Advance will, from time to time, perform a credit check.
But it's not a credit check like you've heard of before. It's called a soft credit check, and its function and purpose are very different from what you might be used to.
Payday loansare generally not reported to the top three national credit reporting companies, so they are unlikely to affect your credit ratings. Payday cash advances are part of a subset of bad credit loans called “loans without credit checks”. Since these lenders without credit checks do not perform any checks of your credit history during the application process, they do not report your payment information to the credit bureaus either.
Payday loans are accessible to consumers with bad credit and usually don't require a credit check. About 12 million Americans use payday loans each year, and most of them don't have access to a credit card or savings account, according to the Pew Charitable Trust. Usually, a payday loan does not appear on the credit records of Trans Union, Experian, and Equifax, which are three major credit reporting agencies. However, special credit reporting agencies may collect your payday loan history. Lenders can keep this in mind when you apply for loans in the future. This Is How Payday Loans Affect Credit Rating.
If you don't pay a payday loan, your file may enter the collection process and a debt collector can report your debt to major national credit bureaus. This is really the only time payday loans will affect your credit rating. If you get a payday loan and pay it on time, you'll never have any problems. And since there is no set definition of what constitutes a payday loan, your state may allow other types of short-term personal loans. However, if you don't repay your loan and your lender sends or sells your payday loan debt to a debt collector, the debt collector may report this debt to one of the major national credit reporting companies.
In this case, you'll see on a credit report that Clarity made an inquiry on behalf of Net Pay Advance. Of course, your credit score will be visible, but it won't be factored into your loan decision. Some states have laws that regulate how much payday lenders can lend and how much they can charge for loans, while other states, such as New York, completely prohibit the practice of payday loans. However, if you choose to get payday loans online, make sure you take them only from reputable and regulated lenders such as Cashco Financial. However, they will report their loan to FactorTrust and Clarity, which are mainly used by payday lenders.
As with most loans, payday loans have implications on your credit rating, which may affect your ability to obtain payday and other types of loans in the future. Each state's laws are different and, in fact, payday loans are illegal in several states, so there could also be help there. Payday loans are fine, but since the interest rate they charge is quite high, those loans should be taken with that knowledge and repaid as quickly as possible. A payday loan is a small, short-term, unsecured cash loan that is usually borrowed against a personal check or paystub with a later date. In terms of annual percentage rates, it is not uncommon for payday loans to exceed 500% or even 1,000%.All in all, taking a cash advance from your credit card is much more expensive than simply using your card to make a purchase.