If you’ve ever received a payday loan and you’re asking yourself, “Can a payday loan improve your credit?” The answer is no. The primary goal for payday lenders is to provide you the cash that you need quickly for that short term cash emergency. Conventional credit as we know it — Experian, Equifax and Transunion are not inquired upon. Borrowers will not see an inquiry on their credit report from your payday lender.
Most, but not all, payday loans are generated by credit-challenged borrowers. There are those who have average or good credit, but don’t have backup cash resources that will also get a payday loan. Convenience is what makes payday loans so enticing,\; no waiting, no lines, and no long applications. A cash emergency can be resolved overnight. Furthermore, your application can be approved in 90 seconds or less with an application that takes 2 to 3 minutes to complete.
Fight Through Your Cash Crunch
The best advice is to fight through your cash flow issue. Most of us don’t want to turn to family or friends for a loan but it’s better than the alternative of getting a payday loan. Some employers don’t mind helping their employees by providing a draw against their paycheck. Have you ever tried selling some of your possessions? It sure beats getting further in debt. Payday loans should be used as a last alternative to getting the cash you need. They are expensive and very short-term, not to mention, they could leave you worse off than where you started. Our tendencies tell us to take the easy path, but in reality, the right way is usually the hardest way.
Count The Cost of Getting a Payday Loan
Payday lenders charge $15 to $25 per hundred borrowed, which means you would pay $75 on a $300 loan, moreover your loan usually does not exceed fourteen days. The question you need to ask yourself, “Is the fee on the loan going to save me or put me further behind?” Second, “Will I have the money on my next payday to pay back the loan?” And lastly, “Will I be stuck in a cycle of re-borrowing?” It’s very easy to get in debt, but it’s very difficult to get out. Payday loans can serve a purpose but by the same token, for some borrowers it’s the easy way out.
Can a Payday loan Improve Your Credit? No, But It Can Hurt It!
The next time you ask yourself, “Can a payday loan improve your credit?” Remember this, payday lenders cannot report the borrower to the credit bureaus. If a borrower defaults on a loan and doesn’t pay the loan back and the loan is assigned to a collection company, the collection company can report the debt to the credit bureaus. Most payday lenders will work with you if you miss a payment or even two. With that said, work out manageable payment arrangements with your lender and stick to it.
Improving Your Credit, Improve Your Life
So when you ask the question, “Can a payday loan improve your credit?” The answer is no. Improved credit puts the power in your hands. It will take time, effort, research and most of all patience. When you improve your credit score, you improve your quality of life.