This post was last updated on March 16, 2021 to include information about Veritec checks, added more reasons payday loan applications get rejected and add information on how to get a payday loan after being rejected.
The main reasons lenders refuse payday loan applications is that they think you can’t afford to pay it back. Factors like too many negative marks on your credit report can also get your payday loan application thrown out.
Even if your application has been denied, you might be able to qualify for a payday loan with another provider. But first, take steps to ensure you won’t get rejected the next time around by reading about the top reasons payday loans get denied.
1. You don’t have enough regular income
The federal government no longer requires payday lenders to verify your ability to repay. But many lenders have minimum income requirements and some states still require affordability checks.
If you don’t regularly have income from a job, unemployment or another benefit that appears in your bank account, you could be denied. You could also be denied if that amount is too small. Often, lenders require you to bring in at least $1,000 a month to qualify for a loan.
2. You didn’t pass a credit check
Payday lenders generally accept bad credit and most don’t run a hard credit check. But some will still look at your credit report when you apply.
Having a low credit score in itself won’t necessarily get you denied. But some negative marks like judgments and bankruptcies can get your payday loan application denied.
3. You didn’t pass a Veritec check
Payday lenders in some states like Florida run all applicants through a third-party database system called Veritec. Veritec uses the data the state has on your finances to make sure you can afford the loan before you apply.
If you get denied for a payday loan because of a failed Veritec check, it generally means you don’t meet the state’s minimum requirements. Often, this means you have too much debt, not enough income or are already delinquent on a loan.
Check with your state’s payday lending laws before you apply again. In some cases, it may be illegal for a lender to offer you a loan under your current financial situation.
4. You don’t have a bank account
While it’s possible to find a payday loan without a bank account, it’s not easy. Most lenders prefer to transfer the funds to your account and withdraw your payment on the day it’s due. And even those that offer cash loans many look at your bank statement when underwriting your application.
5. There are overdrafts on your bank account
When you apply for a payday loan online, lenders may ask to see a copy of your latest bank statements. If your history shows that you’ve dishonored payments — that’s when a creditor has attempted to debit from your account and there wasn’t enough money — you look like a risk to a lender.
6. You get paid in cash
Income paid in cash is difficult to verify. That’s because lenders usually look at your bank account to check that you have regular monthly income. Some might even require you to be paid with direct deposit.
A similar problem can apply to people who receive payment in cryptocurrency. Many lenders won’t check your crypto wallet to verify your income.
7. You’ve filed for bankruptcy in the past seven years
Lenders use your financial situation to determine the risk in lending to you. If you have a recent bankruptcy on your record within the past year, you may be flagged as high risk and rejected. However, there are still options for people with bankruptcy on their record.
8. You aren’t a US citizen or permanent resident
In many cases, you must be a US citizen or permanent resident to qualify for a payday loan. Even if you’re here on a work visa or student visa, payday loans generally aren’t an option for you. That’s because payday lenders don’t accept cosigners to help you meet the residency requirement.
9. You aren’t old enough
In most states the legal minimum age to take out a payday loan is 18. But it’s 19 in Alabama and Nebraska and 21 in Mississippi.
Some lenders also have their own minimum age requirements and won’t lend to anyone under 21. Before you apply, make sure you aren’t too young to take out a loan.
10. You already have a payday loan
In some states, it’s illegal to offer a payday loan to someone who already has one. Some states also have cooling-off periods between payday loans, which can last from 24 hours to over a month.
Even if it isn’t state law, many lenders have a policy that doesn’t allow you to have more than one payday loan out at a time.
How to get a loan after being denied
You still might be able to get a payday loan after being denied by applying with a lender that has looser requirements. One easy way to find one is by using a short-term loan connection service.
But that might not be an option for everyone — or a good idea. If you were denied because you can’t afford the loan, look into payday loan alternatives instead to find a more affordable option.
If you can’t meet residency requirements, consider applying for a personal loan for nonresident instead. Typically these loans come with lower rates and lower monthly payments than you’ll find with a payday lender.
Compare connection services
These providers work to help connect you to a short-term loan you’re likely to qualify for. Submit your information and potentially receive loan offers from a network of lenders.
There are multiple reasons why you might have been rejected for a loan, but don’t be discouraged. You can review your application to make sure you didn’t miss any information before you apply with another payday lender. Not every loan option is right for you so be sure to consider all your options and compare the costs before applying again.
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