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Most people in the UK are familiar with payday loans, they are short term loans that provide cash, usually the same day, for emergency expenses. The money is paid back from the person’s next paycheck, just like a paycheck advance. Payday loans are essentially loans for bad credit, as having good credit is not a requirement for this type of loan.

Loans for bad credit are essential as people with poor credit histories have emergencies just like everyone else. Payday loan companies understand this, they are only lending the money for a few weeks, so their risk is less. Typically, the money from a payday loan is automatically deducted from a person’s checking account on their next payday, so lenders are willing to take the risk on someone with bad credit.

In fact, a payday loan can be a help in building a better credit history. Some payday lenders do pull a credit report when a person applies for a payday loan. The credit report is just used to verify identity, it’s not used to deny a person with bad credit a loan. These companies who get a credit bureau to verify identity do report prompt repayments of payday loans, so it’s a chance for people to start building better credit, while getting the money they need in an emergency.

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