Share this Mister Wong Digg Del.icio.us Slashdot Furl Yahoo Technorati Newsvine Googlize this Blinklist Facebook Wikio Hear this text Print E-mail Tags payday loans short-term loans credit score payday loan

Payday loans are unsecured and short-term loans that need to be paid on the next payday. These loans are designed to help the borrower pay for unexpected bills until payday arrives. However, some people may be wondering if getting a payday loan will affect their credit reports.

How payday loans can enhance your credit report

Depending on your payday loan company, getting such a loan can improve your credit score. These are the companies that conduct a credit check before allowing you to obtain a loan. If you repay the loan promptly, this will be recorded as a positive item in your credit report and thus enhance your credit score. Moreover, if you regularly use payday loans and repay them on or before the due date, this will establish your reliability as a responsible borrower and push up your credit score.

How payday loans can degrade your credit score

On the other hand, a payday loan can negatively affect your credit score if you fail to pay on time. Once again, if the loan company makes a credit check, this will be recorded in your credit report and if you fail to repay the loan and its interest on payday, this causes a decline in your credit score. They can do this if they asked for your social security number when you applied for the loan. The loan company that conducts a credit check is rare but another way that a payday loan can degrade your credit score is when you let the post-dated cheque that you issued bounce. Moreover, the loan company can also inform the authorities if you default on your loan. And default loans won't look good on a credit report.

Add comment

Name (required)

E-mail (required)

Notify me of follow-up comments

Refresh

Send

Cancel