Payday Loans, Short Term Loans and High-Cost Credit
What is a “bad credit payday loan”?
Sometimes, a payday loan is referred to as a “Bad Credit Pay Day Loan” – this means it is designed for people whose credit rating is not at strong to be accepted for a traditional unsecured loan.
This means the risk is higher so in turn, the loan company may increase their interest charges to mitigate against this.
Due to the high cost involved to the customer a payday loan is designed to help meet unexpected costs over a short period of time and is unsustainable for long-term financial issues.
Do QuidMarket offer bad credit payday loans?
Yes – QuidMarket offer short-term credit meaning you can borrow from £300 – £600 for between 3 and 6 months. Repeat customers can borrow from £100 – £1,000 from between 1 – 6 months.
The total amount repayable on your Short Term Credit is clearly displayed before you sign your agreement meaning you know exactly where you stand and there are no hidden charges. QuidMarket does not use a broker to provide you with the Short Term Credit as we are the Direct Lender.
What is Bad Credit?
Every person’s credit history is stored and logged with Credit Reference Agencies (CRA) – Credit Providers use CRAs to help them make a lending decision.
A low credit score means the individual is considered to have a bad credit rating. This score is based on a number of factors including the repayment history (on time, amount of payment etc) the amount borrowed and the amount owed.
A person who does not make timely payments or who have defaulted on previous loans may be considered to have Bad Credit. Having Bad Credit may affect a customer’s ability to obtain credit from established lending sources or from being accepted for a mortgage or other secured loans.
Advantages and disadvantages of a bad credit payday loan
The main disadvantage of a Bad Credit Pay Day loan the interest charges may be increased against the greater risk of the customer defaulting on the loan repayments compared to a customer with a high/good credit rating. This means a person may pay more when being offered a Bad Credit Pay Day loan.
However, the advantage is, without the option of a Bad Credit Pay Day loan, the customer may otherwise not be able to obtain the credit needed to help them through the short term financial difficulty they are needing help with.
Also, Bad Credit Pay Day loans can sometimes be known as “Credit Builders” – when a person has Bad Credit it can be difficult to improve this score without the opportunity of obtaining credit to repay. The more repayments made on time the higher a person’s Credit Rating will be and the more Credit Options will become available.
How affordable is a bad credit loan?
If a Bad Credit Pay Day loan is underwritten correctly, it should be just as affordable as any other credit option. Each Bad Credit Pay Day Loan should either be “funded” or “declined” based on a number of industry / regulatory guidelines alongside each companies own in-house policies – the main thing about a Bad Credit Pay Day Loan is that it undergoes an “affordability” assessment meaning it does not look at the total amount of credit, but rather the individual repayments compared to the customers incomings.
So, after breaking the Bad Credit Pay Day loan down into the individual repayments, this is then compared to the customer’s income and expenditure and deemed affordable or not accordingly.
How can I check my credit score for free?
There are a number of ways of checking your Credit Score for free. There are a number of companies offering this service, including (but not limited to);
QuidMarket is not affiliated or promoted to any of these companies / Credit reference agencies.
Here is a guide to obtaining your Credit Report and what information is held on there;
Will my application for a bad credit loan affect my credit score?
As Bad Credit loans are based on affordability rather than creditworthiness, your credit score should not have too much of an effect on the decision.
However, each loan provider will have their own set of policies and guidelines – each application is judged on its own merit and criteria so until the application is made it is impossible to say definitively what affect a Bad Credit Score will have on the application.
Should I use a broker for a bad credit loan?
Usually, a broker acts as a “middleman” matching potential customers to Credit providers.
This, in turn, can mean the broker will have their own charges for providing this service which is then passed onto the customer – the effect of this can mean a higher cost form of Credit.
The decision is down to you, the customer, but there are the above factors to consider.
QuidMarket is a direct lender and so there are no broker fees/charges helping us keep the costs down to you, the customer.
QuidMarket is fully registered and certified by the Financial Conduct Authority (FCA).
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