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Although payday loans are not part of the group which tracks credit history for loan approval, they will want you to have a healthy bank account. When you have no credit or bad credit, these short-term loans will sure help during a financial crisis. Credit card companies use other “scores” to track you and your financial status which are not so clearly defined in terms and services. These companies are not regulated like payday loan lenders and they tend to get away with “other” practices. It’s time for payday loans to hand over the predatory title.
A payday loan company has clear set guidelines for approval.
* A viewable healthy bank account
* A set monthly income
* Good history with short-term loans
* Current contact information
Most people will say that in order to get a line of credit, a healthy credit score is what it takes. What most people do not know is that with all the current technology and online capabilities, a person is being tracked in many more ways that just a FICA score. Credit card companies are watching financial habits (the current ones) and then make predictions from the gathered results. They watch what store you are shopping at and how much you are spending. Are you going to be a good risk or a bad risk? How well you are treating other creditors.
Let’s say you have made a goal to pay off a credit card. That particular creditor is very happy. All the others are watching you pay down your debt. How do they read into this behavior? A new creditor may want to offer you some great incentives to open up a new line of credit. Perhaps you may qualify for a promotional zero interest rate on balance transfers. Other creditors may look to increase your line of credit, all in hopes to get you to spend more. It’s a tricky web which they weave, but you ultimately have the power to stay out of the credit card traps.
There are no traps or tricks with payday loans. It carries a payoff date not a minimum payment due for months on end. The money borrowed is a one-time deposit. There is no revolving credit which can rise and fall due to money management know-how or lack thereof. Payday lenders carry a haunting reputation of preying on a customer’s financial hardship, but I think this reputation is more reflective of credit card companies tactics.
Creditors want you to apply. All of these incentives are no guarantee that you will be approved. The envelopes say “pre-approved” in other words, if you give them permission to look into your credit, they will jump at the chance, but it doesn’t mean they will like what they find. The hard part with this aspect of luring new applicants into the web is that it leaves a bad trail. The credit bureaus will deduct points off of your credit every time a company checks it out. Just when you thought your chances were good, more bad adds to the wreckage.