Payday loans can actually help your credit in the way that keeping them paid on time as you get them will result in no complaints, which is always a good thing when it comes to your credit score. The tricky thing about payday loans is that neglecting to pay them actually doesn’t have an effect on your credit… that is, until the payday loan company turns the loan over to a collection agency! If the payday loan company does this, then it will end up on your credit score, just like anything will that is turned over to collections.
As you probably already know, this would not be good for your credit! So, does that mean that paying off your payday loans on time will make your credit score better? Well, yes and no. It will not necessarily make your credit score higher, but it can lower your risk as it is seen by bankers, lenders, and creditors, which could mean the difference between getting that loan or that higher line of credit!
A lot of people believe that taking out payday loans to make your credit better is a good idea, but this is not always the case. This often costs you quite a bit of money over the long run, especially considering that some payday loan companies charge a 99% interest rate (which, by the way, is not always legal either)! There are better ways to raise your credit than to turn to payday lenders.
My name is Maurice “Moe” Bedard. I am the founder of America’s #1 Mortgage Forum, LoanSafe.org. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.