Do payday loans affect getting a mortgage?
Payday loans are short term loans that we get from the brokers. There are many people who fear taking a payday loan because they feel it would affect their chances of getting a mortgage. Taking payday loans would not directly affect your mortgage but if in case you have taken the mortgage in about last 6 years then lenders may become warier of your application and might as well reject it.
How does a payday loan affect your credit rating?
The financial conduct authority has lately made it very strict for the lenders to clarify to the borrowers that evidence of their payday loan will remain on their credit file for at least 6 years. Warnings like late payment will cause serious money problems should be given to the borrowers. Such kind of information or warnings are necessary for the first time users of loan, it becomes difficult to understand the complete process in hurry and sometimes the novice users may end up repenting taking payday loans for years to come.
There are payday loans companies that argue that payday loans if paid back in time will not affect your credit ranking. However the only criteria to access your mortgage application is not just restricted to payday loans. There are several other factors that lenders will be taking into consideration before approving your mortgage application. Presence of payday loans in your credit ranking will signify that you have been a part of financial difficulty.
Many other factors including payday loans paid later than the payday date as well as going overboard with the bank account limits would show mortgage companies trend of late payments and non maintainence flags in your credit rating. If your application is otherwise healthy and free of any other kind of flags then it is very unlikely that the lender will solely reject your application on the basis of payday loans. It is thus advisable that you do not apply for any kind of loans at least 6 to 12 months prior to your Mortgage application , particularly loans with high rates of interest like payday loans. This will increase your chances of getting your mortgage application approved as well as will keep your credit rating clean.
Payday loans online are definitely the easiest way of getting quick and easy loan to bridge the gap between increased expenses and low cash towards the end of the month. it is advised to plan carefully and take payday loans only if it is indispensable.
Therefore keeping your credit rating clean as well as maintaining your bank account is also equally important to get your application approved and not just worrying about payday loans alone will do.
It is not difficult to get easy access to payday loans and there are many people who resort to such types of liquid cash for immediate use. If applying for mortgage loans you must definitely keep your credit check clean as well as maintain distance from payday loans.