3 Things To Know About Payday Loans And Your Credit
Posted on: 20 November 2015
If you need a loan and are in the process of trying to rebuild your credit, you may wonder if getting a payday loan is the right choice. Payday loans are great options when you need cash fast, and they are one of the easiest types of loans to get. As you think of ways to rebuild your credit, you might be interested in knowing the following three things about payday loans and your credit.
You Do Not Need Good Credit To Qualify
The first thing to know is that you should have no trouble getting approved for a payday loan no matter what your credit score is, as long as you meet the other conditions required. The other conditions can include having a job and proving your age and identity. You may also be required to have a checking account. As long as you have these things, your credit should not matter.
Most payday lenders do not pull credit reports when issuing payday loans, and that is one of the reasons these loans are so popular. They are also popular because they allow you to get cash fast, and they are available in stores and online.
Payday Loans Will Not Cause Your Credit Score To Increase
The second thing to realize is that, because most payday lenders do not pull credit reports, payday lenders do not report loans issued and paid to credit bureaus. This means that you cannot try to rebuild your credit by taking out payday loans, because they will not be placed on your credit report.
This means that applying for a payday loan will not leave you with an inquiry on your credit report. This is a good thing, because inquiries can cause credit scores to drop.
If you are trying to rebuild your credit, you may want to consider taking a personal loan, if you have good enough credit. Most lenders do report personal loans to the major credit bureaus, and this would be a good way to boost your credit score if you repay the loan on time.
Another option for improving your credit score is to apply for a secured credit card. This may not be an option for you right now if you are in need of cash, but when you get on your feet financially this is a great way to improve your credit score. If you choose this option in the future, make sure you choose a lender that reports to credit bureaus, because there are many that do not.
Payday Loans Can Cause Your Credit Score To Decrease
While payday lenders do not report payday loans to credit bureaus when they issue them, they may report if you are delinquent. Generally, though, this will only happen if you fail to repay your loan for a long time. Eventually, the lender might send your account to a collection agency, and collection agencies almost always report to credit bureaus. Unfortunately, this would be considered a derogatory remark, which would hurt your score rather than help it.
If you want to prevent this from occurring, repay your payday loan on time. If you cannot afford to repay it on time, call the lender and make an alternative payment arrangement. Payday lenders are typically willing to work with borrowers, and this means they will most likely be willing to extend the length of time you have to repay your loan.
Payday loans might not be a good method for improving credit score, but they are easy to get, and they will not cause your credit score to drop. If you are interested in getting one, apply with a payday lender like Payday Express today.
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