In 2015 the Financial Conduct Authority (FCA) began regulating the consumer credit industry including high-cost credit. As such, companies offering payday loans, short-term loans, cash till payday loans, bad credit loans and online loans who were previously registered with Office of Fair Trading had to apply for a license if they “wished to continue carrying on regulated credit activity”.
This was done to ensure customers were being treated fairly, that loans were not being given irresponsibly and to ensure customers were not trapped in a spiral of debt by introducing a price cap. Being granted a license and authorisation by the FCA meant companies had shown evidence of their ability to satisfy customers, not to give unaffordable loans, not to carry out aggressive or coercive debt collection practices and to assist customers in financial difficulty identifying vulnerable customers. The sustainability of companies business models, lending criteria and other policies and procedures were also part of the application process.
QuidMarket was granted full authorisation in February 2016 and we are proud to be recognised as meeting the standards of the FCA. The Financial Services Register is available online.
Payday Loans, Short Term Loans and high-Cost Credit
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 – £1,500 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;
Direct Lender or Broker
When applying for credit there are two options – through a direct lender like QuidMarket or a broker.
But what is a Direct Lender and how will it affect you?
Quite simply, a Direct Lender means the company you make your application with is the company who will, if successful, deposit the funds and with whom you will enter into a Credit agreement.
This gives extra protection as lenders in the UK are regulated and authorised by the Financial Conduct Authority (FCA).
No broker fees
A direct lender will not use an intermediary or third party company to provide the funds, therefore there will be no broker fees. This usually means the costs will be kept to a minimum as some brokers will be paid commission from the lender, or charge a fee to the consumer.