I can’t get a payday loan, what now?

I can’t get a payday loan, what now?

If your application for a payday loan has been declined, then you may feel as though you’ve exhausted all your options.

While there are still ways you can access the money you need to deal with a financial emergency, at this point it’s worth taking a step back to understand why you’re application has been declined, so that you can decide what to do next.

There could be a number of reasons why your application for a payday loan has been rejected. We’ve taken a look at what these are, and what the options are for your next move.

Why you can’t get a payday loan

These are the three most common reasons why you’ve found you can’t get a payday loan:

1. You have a poor or limited credit history

One of the first things a lender does when you apply for a loan is evaluate your credit history. It’s important that you check your credit report regularly so that you’re aware of what it says. Your credit report details all of your borrowing history and how you have managed credit in the past. If you have missed payments or have defaulted on any credit accounts, are in a debt management plan of any sort – including IVAs and Debt Relief Orders – this will be flagged and lenders will be able to see this.

Depending on how recently your missed payments were, it could prompt them to believe you are likely to miss payments to them too, and decline your application. Equally, if you’ve never borrowed money from a credit provider before, then you won’t have any credit history that shows you’re able to pay back what you’ve borrowed. This can make lenders hesitant to approve your application, too, as they simply don’t know what you will do.

When lenders are deciding who to approve and who to decline for a loan, they assess applications in terms of risk. Your credit report doesn’t give a lender all the context behind why you missed a payment a couple of months ago, and even though you may well have had a good reason for it, this will still be a red flag to a lender.

The longer ago a missed payment or default occurred, the less likely the lender is to place a lot of relevance on that event. This is particularly true if you have credit history that demonstrates you are able to reliably make payments and pay back loans in full that is more recent than the negative event.

2. You don’t have a regular income

For the purposes of determining affordability, most lenders will ask that you have a regular income, and may also verify this as part of their checks when you apply for a loan with them to ensure you have the funds to pay back what you’ve borrowed. If you are unable to demonstrate that you have a regular income or the lender cannot verify your income, then this means they may not  have the assurance they need that you are able to repay a loan. This may result in your application for a loan being declined.

3. You already have a number of other loans

Most lenders, including Sunny, perform an affordability assessment alongside a credit check to make sure that as well as being likely to pay back a loan, it’s also affordable for you. If you are already making repayments on numerous other loans, then the lender you’re applying to may decide that you already have a significant number of financial  commitments, and it would be irresponsible of them to add this.

In this situation, the lender may likely decline your application on grounds of affordability.

What to do now if you can’t get a payday loan

The next step is to take a look at how you may be able to improve your chances for the future, when it comes to successfully applying for credit. This includes working to boost your credit score and remove any negative notes on your credit report.

3 quick ways to help improve your credit score

  1. Enroll on the electoral register – This ensures Credit Reference Agencies (CRAs) have a permanent address to attribute to you, ensuring a more accurate score which can give it a boost.
  2. Provide details of your address for the past three years to a CRA – Ensuring all your details are correct and cover the past three years allows a Credit Reference Agency to see where you’ve had credit and give you a more accurate score. CRAs share information, so you’ll only need to input your information once. Experian, Equifax or TransUnion are the three main CRAs to be aware of.
  3. Check your credit report carefully for mistakes – Even if an address is slightly wrong or out of date, this can have an impact on your score. You should also look for any fraudulent activity or credit products that you didn’t sign up for listed on your report and have these investigated with the aim of removing them.

As well as three quick fixes, you should also continue trying to make payments on any credit products on time and in full to avoid them impacting your score.

Look into an alternative solution

If you need the money for an emergency, you could consider joining a credit union. These are a solution for those who are struggling to obtain a loan from the high street and are created by a local community. You can find a credit union in your area here – as well as use one to manage your savings and even banking.

Looking for a speedy loan?

If, in the past, you’ve found that you can’t get a payday loan but have since taken steps to improve your credit score, then you may now find that some lenders will accept your application to them. Sunny uses a soft credit search to help you understand how likely you are to be approved for a Sunny loan, with no impact your credit score. Get started by hitting the button below.

Our loans don’t have to be paid in full by your next payday, are available in amounts from £100 to £2,500 and won’t require you to pay a penny in fees.

Looking for further information on other lending options?

Want to know more about short-term loans and the circumstances behind why you may need one? Take a look at our other guides below.