Payday Loans Could Deny You Mortgage

Article excerpt

Byline: Ruth Lythe

MILLIONS who have taken out payday loans are being blacklisted by banks and building societies because they are too risky to lend to.

Families forced to turn to the short-term loans - often charged extortionate interest rates, as high as 16,000 per cent in some cases - are routinely being refused mortgages.

Since the credit crunch began, an estimated three million have used a payday loan to access money quickly.

Increasingly they are being taken out by middle-class families and young professionals who have been lured by adverts on television or plastered on the side of buses. They take out payday loans as a way of borrowing a few hundred pounds for a few days to avoid missing their rent, phone or utility bills.

But banks fear that those who have done so are not safe borrowers - even though many have never missed a payment.

Since January, many of the big payday loan companies have been sharing data on their customers with credit reference agencies. …