
10 Reasons You Were Denied a Payday Loan
7 Min Read
Usually, by the time you apply for a payday loan, you already understand that your options are limited. A big part of Americans has a credit history that is not good enough to apply for a larger loan, like a personal installment loan, from traditional lenders.
That’s why most rely on getting a small payday loan. But what if you were denied this loan product? It’s important to know the reason so you would understand what to work on. And there’s always a chance it was a mere mistake in the application form.
Table of Content
- Why Do So Many People Rely On Payday Loans?
- “I Keep Getting Denied for Loans. Why Can’t I Get a Payday Loan?”
- How to Get Your Payday Loan Approved?
- FAQ
Why Do So Many People Rely On Payday Loans?
At least 12 million Americans use payday loans every year. That adds up to roughly 6% of us adults. And there’s a high chance that the statistics are not full. So why are payday loans so popular? There are several reasons for that.
First of all, traditional financing institutions such as banks and credit unions have extremely high standards for applicants for short-term loans. In order to be approved for a loan from those institutions, one has to fit many criteria, and one of those criteria will be a good credit score.
Unfortunately almost half of the American population does not have a good credit score either due to lack of credit history or to problems with paying short-term loans that were previously taken out.
The second reason might be that payday loans are extremely convenient to take. Today it’s very easy to apply for a payday loan online from the comfort of your home or even on the go from the screen of your smartphone. The application process is extremely easy and fast.
In case of an emergency payday loan is basically the only available option for the general public. The payday loan amount is usually in the applicant’s bank account by the next business day. After that the borrower can cancel the money the way they see fit, no questions asked.
And then there is this problem with the credit history. There are plenty of people who have a poor credit rating. It doesn’t mean that they did anything. They just didn’t take out enough loans in their lives so for the traditional lender to be able to make up their mind whether they are good for their word.
“I Keep Getting Denied for Loans. Why Can’t I Get a Payday Loan?”
Being denied for a payday loan might sound like a hard blow. But before caving into panic it’s important to analyze what went wrong. Perhaps, that was just so mistaken the application that is easy to fix. Or the information in the documents did not get reflected in the application form as it was supposed to. Good news, a poor credit score is rarely a reason to be denied a payday loan.
Let’s look at the reasons that might actually be serious enough for someone to be denied a payday loan.
1. You Don’t Meet Criteria Established By A Payday Lender
Before you try applying for a payday loan, it’s very important that you’ve read all the necessary information provided by the lenders. Although some lenders have a condition that an applicant must be at least 18 years old, there are also some who have a higher age minimum (at least 21 years old).
2. You Don’t Have a Steady Income
Lenders might have additional questions if your bank statement shows that you have not enough income. Since payday lenders do not usually do a hard credit check, the only way they can be sure that you have the means to return a short-term loan is by making sure you have a monthly income. Doesn’t have to be a big one: some lenders accept child support and even unemployment benefits as a steady income. In case you are a gig worker just search for the lender who is providing loans for freelancers.
3. You Don’t Have An Active Checking Account
Usually, in a payday loan agreement there will be a closure stating the following. In case you don’t pay your payday loan in the discussed time, the lender has a right to extract the sum of the short-term loan plus the fees from your checking bank account.
This rule allows many payday lenders to be more secure and they will get the amount they are lending you back. In case you don’t have an active checking account it will be impossible for them to secure the repayments of the loan.
4. The Loan You Have Requested Is Too Big
In case the loan sum you have requested is too big you might have financial difficulty repaying a loan. If you are not making enough money on a monthly basis to be able to repay the loan from your next paycheck, the lender might deny you not the loan as such, but the amount you are requesting.
5. You Have Requested a Loan With Many Lenders
When you apply for a payday loan, direct lenders might perform only a soft credit search on you, but still, they do have their own system where there might be checking information on you. In case you have requested a loan with more than one lender at a time, most probably you will be denied the loan from all the lenders.
You should know that requesting a loan from multiple lenders will not make your chances of being approved higher. Check our article to know how many payday loans you can have depending on your state law and loan history.

6. You Have An Unpaid Payday Loan
Your past borrowing history might be the reason why your payday loan application was denied. If you already have existing loan agreements with another lender your payday loan application with the new lender might be as well denied.
7. You Have Filed For Bankruptcy In Past
In case you have filed for bankruptcy in the past 7 years, it might be difficult for you to get approved for a payday loan online. Usually, filing for bankruptcy day doesn’t come out of the blue and there are serious reasons influencing your ability to pay your debts. And the situation might just be too risky for a lender to approve you for a loan soon after bankruptcy.
8. You Have a Gambling Habit
Too many interactions with gambling sites may alarm your potential direct lenders. If your bank statements have too much money exchanging with the gambling sites, there might be a chance you won’t get approved for a payday loan. Despite the controversy around the industry, the ethical part is important to payday lenders, and it’s not in their interest to support a gambling habit.
9. You Have a Joint Account With Somebody With Bad Credit
Another reason you might not fit the eligibility criteria for a loan is that you have a joint account with someone with bad credit. Maybe your credit rating is fair but you have joint finances with someone with too much debt. So, when applying for short-term loans you have to assess not only your financial situation, but also the other party’s borrowing history.
10. You Aren’t a US Citizen or Permanent Resident
Many lenders have a policy against lending money to people who aren’t US citizens or permanent residents. They don’t want to be in a situation where they’re forced to foreclose on a property that’s being occupied by someone who isn’t legally allowed to be there. Also, they don’t want to risk losing all of their investment.
If you’re not a citizen or permanent resident of the United States, you might be able to find a lender willing to take a chance on you if you can provide them with proof that you’re planning on becoming one soon—like an application for citizenship or residency.
How to Get Your Payday Loan Approved?
In order for your loan application to be approved by the lenders is this important you follow some very basic rules.
- Know your credit report. To feel secure when applying for an online payday loan, you should know what your credit file is stating. In case you have a poor credit score you might consider improving it.
- Double-check the information you provide. When filling in the loan applications, keep in mind the lump sum of loans placed into your bank account as direct deposits. For this reason, it’s important to check the accuracy of the information you provide in your credit applications.
- Make sure you’re good with existing loans. When you have outstanding installment loans or maybe auto title loans, it is crucial for you to make timely payments on them. If not, your payday loan application may be denied.
FAQ
What Do You Need to Get a Payday Loan?
Payday loan requirements may differ from lender to lender. If you’re less than 21, make sure that you will apply with the lender with a bar of 18 years old.
How Important Is It to Have a Good Credit Score?
It is not essential for some lenders to see your good credit score, but a high credit rating allows you to have cheaper options on your loans.