The increase in applications for payday loans is fuelled by the poor credit utilization scores People who have poor credit scores cannot access new lines of credit or seek to increase their existing limits, some may even have had their existing credit limits lowered. They have no alternative but to seek funding from alternative sources in order to meet their new or existing obligations on over extended credit cards and overdue loans. Payday loan companies continue to receive negative reviews but still remain the first stop for many looking for way a fast and easy way to borrow cash.

The application process is fast and simple and can be done online. It is very convenient as you can apply from the comfort of your own home, in your pajamas, in bed and have the proceeds of your loan deposited into your bank account by the next business day. People who should be concentrating on consolidating or restructuring their debts and fixing their poor credit score offer. Any solution to their problem should involve a close examination of their budget to see the areas where they can tighten up expenses and lowering their debt. It is important to understand how the problem of poor credit utilization rates work before borrowing.

Your credit utilization rate or credit score is calculated by the difference between how much you owe and how much you can reasonably afford to owe. You should take your bank and credit card statements as well as any other outstanding loans or commitments and spread them on the floor or table. Go get the calculator and determine the total outstanding balance. The figure you get is your total debt. Read the bank and credit card statements and find the total of all the credit limits. This is the figure that will show you how much debt you could potentially have if you maxed out all your credit cards and lending limits. Simply divide the total debt by your total potential debt to arrive at your credit utilization ratio. The figure you arrive at constitutes one third of your credit score. The higher your score is then the sadder the shape your credit score is in.

Remember the control is in your hand. You have total control over your spending habits and patterns and ultimately your credit score. If you wish to improve your overall rating, start by examining closely your monthly expenditure. Compare it to your monthly income. Is there are a surplus or a deficit? What is the best way to utilize the additional funds or to close the gap if one exists?

Apart from paying off debts and servicing existing loans you should always put some money aside for unforeseen circumstances and any emergency that may arise. You should try to save some money by putting aside a little at a time while trying to pay off your debt. You may be very tempted to put all your resources into quickly paying off existing debt without saving any of it, If an emergency were to arise you would be back at square and forced to borrow in order to survive. Utilizing credit cards and taking out small loans from reputable payday loan companies can provide necessary and quick solution. The service these types of direct lenders supply can be a life saver for those persons in need of a short term loan who cannot qualify for a loan from a traditional lender. The most important thing to remember is try to borrow only what is absolutely necessary and try as much as possible to stay within your budget.