Credit Checks and Payday Loans

Payday loan or cash advance loan products are quite different to other loan products that lenders may provide. It is probably the only loan product that doesn’t require the lender check the borrower’s credit rating. This is done in the interest of time and also costs. Time because cash advance loan are often emergency loans which require a processing time of one day or less from application to cash deposit. Costs because the lender will have to pay a certain sum to get a credit report from the reporting agencies and since the loans are normally for smaller amounts like $1,000, it simply doesn’t make financial sense.

We have to keep in mind that there are actually quite a few different types of cash advance loans. The most common sort is where you are given a loan based on your paycheck amount and also your availability of a checking account. You will be required to write a post dated check for the loan amount plus whatever administration fee and interest chargeable. In return for the check you will either have the money you borrowed deposited into that same checking account or have it passed to you in cash.

It is this type of cash advance loan that normally doesn’t require a credit check. This type of cash advance loan provides the least amount of risk to the lender as the lender is already holding a check that will in affect guarantee payment to them. If you fall short of the amount in your bank account come debt settlement day then you will be forced into paying penalty fees for writing a bounced check or worst the bank may even grant you an overdraft facility which will cost your even more.

As mentioned above there are however many different types of cash advance loans. Some of them have different arrangements that will require credit checks especially if the loan amount is larger. Most of the time the ones that would require credit checks are where you do not offer the security of a post dated check or you might not have a bank account. In these situations the lenders will often treat your loan application like that of a normal loan. That means that stricter verification processes and requirements are enforced and that your application process could take as long as a week before you actually see the money.

What is particularly important during when obtaining a cash advance loan isn’t so much the credit checks however the complete and provision of correct information to the lender. The requirements of the loan are already reduced and thus there really is no room for error when you are providing information to the lender. Under most situations a loan will be rejected purely because there are errors in the application form or the documentation that is requested isn’t complete.

Instead of worrying about credit checks that cash advance loan companies might perform on you, it would actually make more sense to concentrate on getting all the details of your application and make sure that it is all correct. Cash advance loans are inherently easy to obtain and not having a credit check is one of those enabling factors.