WARNING about Pay Day Loans

People are currently being advised or have the opinion that taking out Pay Day Loans will help to increase there credit score. Beware, this can be very harmful towards the success of a mortgage application and will quite often cause an application to be declined.

Imagine yourself in the shoes of a mortgage lenders underwriter, after you have asked to see the applicants last three months bank statements and you see credits from a Pay Day Loan Company. This gives you the impression that the applicant cannot financially get through a month without the help of one of these loans, so how can they afford the monthly mortgage payments. Affordability is a vital element that must be established as one of the main parts of a mortgage application.

Please don’t get me wrong, having some affordable credit and a good payment profile can be very beneficial and can help to boost a credit score. But if I am not mistaken Pay Day Loans were not designed for this and should not be used for this reason.

Peter

Posted on December 13, 2012 by Peter Marriott, in: Staff posts

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