28 Feb Are Instant Payday Loans a Risk to Your Credit Score?
When you’re looking for a fast credit option to cover an unexpected expense, it can be difficult to cut through the marketing jargon and decide which option is best for you. Many lenders offer instant decision loans – but weighing up the benefits of having instant access to cash versus what’s best for your long-term financial situation is important before making any decisions.
At QuidMarket, we strive to offer our hard-working customers the cash they need to deal with short-term cash flow issues as quickly and without fuss. We do this without cutting corners, and ensure we take steps to safeguard our customers against further financial difficulties. We can’t guarantee we offer instant cash loans, because this would be at odds with our ethos. If you’re considering taking out a short term loan with us, we want you to be confident in your choice, and so have put together this page to inform you about the world of instant loans in the UK.
What Are Instant Payday Loans?
The internet has revolutionised how we borrow money in the UK. Instead of having to visit a high street lender or bank, you can fill out a simple application form for an instant loan online from your smartphone or computer. The approval process is much quicker too, with information available to lenders from Credit Reference Agencies at the touch of a button. Add in the Faster Payment technology of online banking and the entire process from start to finish has made instant loans the standard. But are they in your best interests?
An instant loan may sound appealing, especially if you’ve found yourself in the stressful situation of needing to borrow cash to cover an emergency expense, such as if your car is in the garage for urgent repairs. You might be tempted to go with the quickest instant loans in the UK so that you can pay the bill and get your car back without delay. However, instant cash loans have their drawbacks, and they might not be the most suitable form of borrowing for everyone.
If you have a low credit score, it could be very difficult to find instant loans for bad credit. Part of offering instant payday loans requires lenders to automate their decision-making process. Some will simply run your application through a computer program in order to process it instantly and if your credit score is below a minimum threshold, you could be turned down entirely.
Having been rejected for an instant payday loan will be noted on your credit file and will stay there for around two years, visible in any credit checks carried out during this time. This could make it more difficult for you to be approved for credit in the future – whether that’s going to another lender, applying for a new phone contract or finding a mortgage.
Even if you are approved for an instant loan with a bad credit score, you may have to pay above average interest rates as the lender will want to mitigate the risks involved in offering instant loans online. Short term credit is already an expensive form of borrowing, and so avoiding situations in which the costs could increase further is vital. We aim to strike a balance between protecting your future finances and the benefits of instant loans in the UK.
As an alternative, you may prefer to choose a lender who bases their decision-making process on your affordability. Simply put, this involves looking at your regular income and outgoing payments you make each month, and determining if you could sustainably afford the loan you have applied for. At QuidMarket, we think this is a much fairer way of offering. While it means we don’t offer instant cash loans, we still process applications as quickly as possible without cutting corners. And it’s much fairer for our customers too.