Can a History of Payday Loans Destroy Your Chances of a Mortgage?

The payday loan industry is booming. Millions of people are getting short-term cash into their bank accounts every year, and this shows no signs of slowing down for the foreseeable future.

Legitimate payday loan companies are everywhere online, which makes it extremely easy for applicants to get cash in their bank account when they need it the most.

Maybe you have a history of taking out payday loans and now wondering if they can hurt your chances of getting a mortgage?

In the majority of cases this will have no effect at all, especially if you only took out a few payday loans and always paid them back on time.

The problems start if you ever missed payday loan payment deadlines, as these kind of details are reported on your credit file. This means that if you didn’t always pay the money back on time, you might find that your credit score has been negatively affected.

Mortgage lenders look very closely at your credit report, and it is one of the main factors that helps them come to a final decision. If they see that you have not always paid payday loans back on time, or even defaulted on them altogether, then this could lead to them rejecting you for a mortgage loan.

In order to find out if your credit score has been negatively affected by payday loans, it’s a good idea to request a copy of your credit report. You can do this free of charge from any of the major credit agencies, and you should receive your copy within a few days.

Once you have your credit report then you need to look over every item closely. Sometimes there might be mistakes, and it is often a simple process to contact the credit agency and get the offending item completely removed from your report. When you do this, you should see an immediate boost in your credit score rating.

Ultimately, there are many different factors that mortgage lenders take into consideration when looking at your application.

You may have missed payday loan payments in the past but still get accepted for the mortgage loan you want, while on the other hand, your credit report might be completely clean but you end up getting rejected.

The most important thing to keep in mind is to never give up. Just because one mortgage lender rejects you, that doesn’t mean the next one will. Persistence is the key.