What to do now if you can’t get a payday loan?
Being declined for a payday loan is not always the end of the road To determine your next steps, there are a few things you can do, including:
Speak with the lender
The first port of call should be the lender that declined your application. It is worthwhile contacting them and asking for some information on why your application was unsuccessful. Depending on the reason, lenders might not answer, but it is worth asking to check. If you get turned down because of poor credit, your lender wouldn’t know the reasons behind your credit score, but they may be able to tell you that your credit score was the reason.
Check your credit score
If you get declined because of a poor credit score or unaware of how your credit rating shapes up, your next stop should be to check it. Credit reference agencies, or CRAs, often have tools to help you check your credit score online for free. If you find your credit rating is bad, there are some things you can do to fix it.
Consider alternatives
When you are declined for a payday loan but still need finance, it can be very stressful. Think carefully about all your options and whether you need to borrow as much as you applied for. Ask family or friends for a loan to help out or find an alternative short-term finance option.
Three quick ways to improve your credit score
Having a poor credit rating is often the reason most people get declined for a payday loan. If you find yourself turned down because of bad credit, you will likely have to improve your credit score before you can try and apply again. Here are three quick ways to improve your credit score:
- Register on the electoral roll: Not registering on the electoral roll at your current address can negatively impact your credit score. Register on the electoral roll to give your rating a little boost. This is necessary even if you live at home with your parents or in shared accommodation.
- Pay bills on time: This might sound simple, but many people still fail to ensure they pay all their bills on time. Late payments can show on your credit history for seven years. If you really can’t make a payment on time, call your creditor and arrange an alternative payment option.
- Dispute credit history errors: Credit records are not free from mistakes, and one minor error could be dragging your score down. When you check your score, keep an eye out for any errors and dispute them if they show up.
What are the alternative solutions?
As we’ve mentioned, payday loans are not the only option available when it comes to short-term borrowing. There are some alternative options to consider:
Credit cards
Credit cards can be great to have in emergencies and will often save you money, compared with a payday loan. You will generally have slightly longer to pay off the amount borrowed if you need it, and there isn’t a set deadline for full repayment. A credit card doesn’t have to be out of the question; many lenders offer credit cards for those with bad credit. These credit cards can help build your credit score, which could help you out in the future.
Credit unions
Credit unions are community loan providers. Traditionally, they are relatively small, non-profit organisations designed to help a community. In recent years, they have started to become more commercialised and lend to a broader audience. They are often a cheaper alternative to payday loans as there is a cap on the amount of interest they can charge. They are also more likely to approve someone unemployed and those with bad credit because they are specifically there to help their community.
Overdrafts
Most banks allow you to add an overdraft to your current account. You must avoid unauthorised overdrafts as they come with hefty charges. If you have been declined a payday loan, you might be eligible for a small overdraft from your bank.
Welfare assistance schemes
If you are applying for a payday loan to cover daily essentials, such as food and bills, you might be eligible for help from a welfare assistance scheme. These vary depending on the area but usually provide foodbanks, pre-payment cards or vouchers to help you get your essential items without having to borrow.
Short-term loans
Payday loans are not the only type of short-term loan available. Some lenders offer short-term loans which can be paid back in instalments, as opposed to one lump sum. It can be easier to be approved for these because the repayment amount is smaller each month.
How can The Money Shop help?
If you are still looking for a short-term loan but have been declined a payday loan, The Money Shop might be able to help. Our broker partner works with a panel of lenders who offer short-term loans for various durations and amounts. We cannot guarantee you will be approved for a short-term loan through The Money Shop if you have been declined finance elsewhere. Don’t panic if you have been declined for a payday loan. We are here to help you obtain the funds you need. All short-term loans and payday loans are subject to terms and conditions.
