Bad credit affecting your access to cash?

Knowing you have bad credit can feel like a big weight around your neck, because it can rule out access to traditional sources of money like bank loans or credit cards. When you need a fast cash injection, your track record of paying bills, taking and repaying credit and even where you live can seriously impact your options.

Pay day loans have recently been touted as an alternative source of short term cash for people with bad credit – some payday websites even advertise their service on that basis – but does that make them a good alternative over traditional lenders?

Payday loans for bad credit?

Payday loans are usually small sums of money offered until your pay day, when the money you borrowed is collected along with a fixed fee of around £20-£30 per £100. The size, length and cost of the loan are often fairly rigid, but funds can be accessed rapidly and the approval criteria are usually simple, which makes them appealing to people with bad credit.

Critics of short term cash advances argue that if you have bad credit you probably shouldn’t be borrowing money in the first place, or certainly not paying for high cost credit like a pay day loan. But we live in a credit-based society and even the best laid plans sometimes don’t account for unexpected expenses or a bad run of important bills for example. And if you do have significant black marks on your credit record then the chances are that cheap loans won’t be available to you.

Bad credit vs bad debt

Most importantly, bad credit is not the same as a bad debt problem. If you have an existing debt problem, then taking out a short term loan is only going to add to your debt and quite possibly send you into further trouble if you don’t repay on time. But everyone can make mistakes and having bad credit doesn’t automatically mean you can’t ever be trusted with cash again!

How is Wonga different?

Unlike payday lenders, who generally aim to establish your identity and source of income, Wonga carries out a sophisticated credit check in a matter of milliseconds. The company uses data from the credit bureaus as part of its automated decisions, but the system is completely objective and only aims to check you can afford a fast Wonga loan. Unlike a bank loan, Wonga doesn’t try to predict your reliability over several years.

So bad credit could influence whether you can access a Wonga loan, but it certainly doesn’t rule you out and - with flexible, short term loans of up to £1,000 available - the cost can be considerably lower than a payday cash advance too.