Each payday loan company in Ontario and British Columbia has different underwriting rules that determine whether or not a customer will be approved or denied. However, there are generally common denomenators for why your application might be denied. Since online payday loans and retail front payday loans have different lending criteria, we’ll identify online-specific reasons separately.
You asked for too much
Every payday lender has a formula to determine the risk they’re taking to loan to you. Part of this formula weighs how much you make (whether it’s gross pay or net pay depends on the lender) with how large of a loan you’re asking for. For example, if you’re a first-time borrower and you clear $900 per paycheque, but you’re asking for the maximum first time amount of $500, your application might be denied. Why? Some lenders, like GoDay.ca, don’t want to overburden your cash flow situation by essentially giving you more than you might be able to pay back. Responsible lending means considering every aspect of your financial situation, not just your immediate need. However, if a lender says no to your initial request, they will probably offer you a lesser amount, IF other criteria are first met.
Your bank account hasn’t been open long enough
A sign of financial stability for most lenders, including the big credit companies, is weighing certain time factors that are directly related to risk. One of these is determining how long your bank account has been open, and if you’ve closed one or more in the recent past. This might indicate fraud to the lender or a general instability (like trying to prevent pre-authorized withdrawls by closing accounts).
You haven’t lived at your current address long enough
This is related to the above criteria in terms of financial stability. Banks and major credit companies also weigh this in their lending decision-making process as well. Generally under 6 months might raise a red flag, but if you were at your previous address for at least a few years, that will help considerably. The more you’ve moved around in the last 5-7 years, the harder it might be to be approved – unless you’ve had the same job for several years. Remember, lending is all about weighing risk.
You work part time
Not all lenders will deny you outright if you only work part time, but many will simply because you might not make enough or the kind of employment isn’t considered stable or long-term enough. Multiple part time jobs, however, might increase your chances of being approved. Again, time at each job and how much you make are two big factors.
Online Payday Loans Only – There’s a problem with the information you submitted
It’s important to be really careful when filling out an online application. A simple typo in your address or banking information can cause the system to deny you. While this can be over-ridden by a live customer service representative, a slight flag might be raised in case of fraud. We’re always on watch for identity theft.
There’s fraud on your account
Whether or not it’s your fault, if the lending system gives a red flag of fraud, you’ll most likely be denied. Unless you can otherwise prove that you are indeed the owner of the information and have been a victim of identity theft, there’s not much else you can do to be approved.
Yes, some payday loan companies boast ” no credit check! ” or “everyone is approved!” but we don’t believe that’s responsible lending. At GoDay.ca, we do take credit into consideration, though it is only one factor in our decision-making process. If for whatever reason your credit is very bad, and other factors don’t line up either, the chances of you being denied go through the roof.
You have too many payday loans out
Again, some companies don’t care how many loans you might have out, but we do. If you’re tapping multiple sources for cash, it’s a red flag that you might not be able to pay the loan back if you’re over-burdened. We want to be a solution for your cash-flow problem – not an aggrivator.
You’re overdue on your current loan
Sorry – if you have a current loan out with us and you apply for another one, we are required by law to deny you. You can never have two of the same type of payday loan out at once with GoDay.ca – and no other company should be permitting it either. It’s in the Payday Loan Act.
You’re in collections
Same as above. There’s no way a company will lend you more (or they shouldn’t!) if you haven’t paid back your previous loan.