If you have recently applied for a mortgage but have been turned down, it is a good idea to check your credit report. If everything seems in order, but in the recent past you have used payday loans, it’s possible that mortgage lenders have deemed you a higher risk. Use of payday loans indicates risky financial behaviour or at least mismanagement of your money, both are things that mortgage lenders frown upon.
What Are Payday Loans?
Payday loans are typically short-term, high-interest, unsecured loans for smaller amounts up to around £1000. The short repayment period and high interest rates often lead to Payday Loan users struggling to make repayments, resorting to taking out other loans to repay them.
Money Hub recently revealed that in the last 6 months, 18% of UK adults have applied for payday loans in comparison to 10% of UK adults applying for mortgages. This indicates the precarious financial situation that a lot of people now find themselves in, due to the high cost of living.
