Typically if you’re applying for any form of credit, the lending company will carry out a credit check. This enables them to assess the risk involved in lending you money. Your credit history will tell them what you have borrowed in the past and whether you have defaulted on your repayments.
People who have a poor credit history will often find lenders refusing to offer them credit. Until the advent of pay day loans the only alternative for those with bad credit was to borrow money from friends or family or to pawn their possessions. There are probably few people who would relish the prospect of approaching their nearest and dearest for a loan and there is often a real stigma associated with coverting your treasured possessions into cash at the pawn brokers.
Pay day loans are available to those with a poor credit history because the loan providers do not carry out a credit check. All the lenders want you to prove is that you are currently employed, how much you earn and when you get paid. This is easily achieved by submitting copies of your most recent pay slips with your completed application form. A credit check is not required because the loan will be due to be repaid in full (plus interest of course) on the very day you next get paid. This means that the maximum duration of the loan would be 30 days and the loan is of course an unsecured loan.
The loan companies mitigate their risk by either automatically applying to your bank for the repayment (if you apply on-line) or requiring you to provide them with a post-dated cheque for the repayment (if you apply in-store). The repayment date is always the day on which your salary is paid and therefore the funds are pretty much guaranteed to be available in your account to make the repayment.
No credit check pay day loans are now widely available in the UK and reputable lenders can be found both on-line and on the high street.
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