Mortgage lenders are ready to ban applications from landlords who take out payday loans to cover short-term expenses.
Credit rating agencies are under pressure from banks and building societies to highlight payday loan information about borrowers - but many short-term lenders bypass the system by carrying out ID references without credit details.
One of the big three credit bureaux, Experian, lists payday loan data as a separate file on borrowers.
Experian confirms this information has been available to mortgage lenders for several months but refuses to disclose which lenders routinely access the data in support of mortgage application checks.
Payday loans are often quicker and cheaper to arrange than overdrafts and can provide spending stop-gap cash flow for a landlord arranging longer term borrowing but who needs to pay out for an emergency expense, like boiler repairs.
Many mortgage lenders are concerned taking out a payday loan is an indicator of financial difficulties - but for landlords short term borrowing can add up to a sensible business decision.
Another fear for lenders is some payday loan firms do not register financial data with credit rating agencies, which lets customers take out more than one loan at a time without any details showing on a credit history.
GE Money has broken ranks to confirm mortgage applications from landlords who have taken out a payday loan within three months of the application or twice within 12 months.
“As a responsible lender in a challenging market, we review a range of data to make prudent mortgage lending decisions. Payday loan data is one of many items included in this review. If a mortgage applicant has a current or recent payday loan, it is unlikely we will consider their mortgage application.”
