Mortgage Brokers have reported that in the past 12 months 85% of mortgage applications involving previous Pay Day Loans, were rejected outright. And of the 85%, a staggering 57% had otherwise perfect credit histories.
Prior to 2012, it was impossible to distinguish between Pay Day Loans and other credit applications, but both Experian and Equifax now list these separately. Unlike other sources of credit which might actually aid a mortgage application, High Street lenders view Pay Day Loans as a financial cry for help and react accordingly. The message is simple: avoid Pay Day Loans at all costs, as even a satisfied one is the ‘Kiss of Death’ in the financial world.
Mortgage Brokers are not saying it is impossible to get a mortgage with a recent Pay Day Loan application on your credit file, but that they would have to ‘shop around’ for a willing lender and that the applicant would almost certainly end up paying a higher rate.
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