Do payday loans contact your references?

It is quite a common practice for lenders to ask for details of referees. The practice is more common when applying for a personal loan, an auto loan, student loan or mortgage.

Such personal references are usually used as a security measure in the case of someone dishonestly claiming, abandoning the loan, or silently flitting. Where a customer abandons their credit agreement and becomes unreachable, a referee will usually be contacted to aid in locating the client. They are also used to judge a client’s character, in assessing suitability for the funds. That is a traditional kind of reference used mainly for traditional lending, but rarely seen in the payday lending market.

In the payday lending sphere, references are occasionally used to confirm your identity and prove you are who you say you are, but in most cases character references are not requested. The type of references used in payday lending is generally requested as your employer.

Requesting an employer as a reference can help to prevent fraud, to confirm your identity, your employment and your residency details. To this end, a payday lender will indeed contact your referee where your referee is your employer. By doing so, the process of application can be greatly accelerated while risk is managed to a level satisfactory to the lender.

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