Skip to content

How taking a Payday loan affects your credit score

BY Rachel | 5 November, 2018 | no comments

A Payday loan, is often referred to as an immediate solution of obtaining cash, arising due to any unexpected reason, to oversee your short term requirements of finance.This can be as a result of needing money for medical treatment, urgent house repairs or just day to day expenses, to tide over the period till your next salary check arrives. A Payday loan should normally be only availed in emergency cases, and never to pay off any other outstanding debts, simply because these loans are only meant for temporary financial assistance.

Most people may not opt for Payday loans, unless in dire need of a quick financing solution, as they assume that such unsecured high interest loans are likely to impact their credit rating. The truth is that a Payday loan may actually assist in improving your credit score, unlike any other credit account, providing the loan repayments are made in time. This positive history of your installments will reflect in your file and make your profile towards credit healthy. Click here to read more so you can make an informed decision.

The truth is that a Payday loan may actually assist in improving your credit score, unlike any other credit account, providing the loan repayments are made in time. This positive history of your installments will reflect in your file and make your profile towards credit healthy.

There is another major advantage of a good history of repaying Payday loans, as a prospective investor will be able to decide on giving a loan just by a quick glance at your file. Rather than just see your application which you had made before, now they have a clear idea of your financial situation. There may be other factors which may influence the decision of the lender, but your credit score is certainly one of them.

Another issue which a Payday customer is worried about is that how taking a high coast loan would reflect with his bankers.Though there should be no direct connection on the ability of the customer to repay any loan, an encouraging credit report of the Payday money providers, may actually be a seen as a positive factor by your banker. Banks gauge all clients, both existing and potential, on a case to case basis, and not from whom the loan has been taken. Your borrowing and payment history are adequate pointers to make lenders put their faith on you.

Just a quick recommendation! While the ease of obtaining a Payday loan may be easy, there are certain guidelines that will avoid you committing some common errors. Avoid taking too many loans, even if you have paid off all your earlier loans as they may denote an unstable financial situation. In case your application, for some reason or the other is rejected, do not make another enquiry or application in haste. Multiple applications will show up in the file and would again suggest unsound financial standing.

Any Payday loan is a short term, high interest and low amount loan, but when you apply for one there are certain benefits too. When no other finance options are available a Payday loan comes in very handy. The common scenario includes not having credit cards or savings. Payday loans do not require a check of your bank statements and can be readily availed by persons with financial issues. So long as you understand the terms and conditions, a Payday loan is the right alternative to quick money problems.

Discussion

There are no comments on this entry.