Your credit score follows you around wherever you go. It is affected every time you borrow, which includes when you use payday loans. Some people avoid payday loans for various reasons, as they fear that it may have adverse effects on their credit score. However, you can relax, because these fast cash loans can actually help boost your credit rating if you take the right steps.
How Payday Loans Help Your Credit
- Repaying the loan on time can increase your credit score slightly.
- Payday loans simply appear as loans on your credit report.
- Since payday loans are short term, they can help your credit score quickly.
- Paying the loan on time shows lenders you are a reliable customer.
Possible Drawbacks of Payday Loans
- Credit bureaus may someday list payday loans, which could be negative.
- Payday loans can be high risk if you do not pay attention to the terms.
- Interest rates can skyrocket if you do not repay the loan on time.
- Your credit score can be adversely affected by not paying off the loan.
Who is Best Suited for Payday Loans?
The question of whether or not you should pursue a payday loan depends on your income situation. If you have a steady job or earn regular income from self-employment, then you can certainly benefit from payday loans, provided you follow the terms and pay off the loan quickly. These types of loans are easy to get if you meet the minimal requirements, and they don’t involve a credit check. They are mainly designed for people who have a need for fast cash between paychecks.
These fast cash no hassle loans, however, are not intended for people who have no way of repaying them. That’s why steady income is one of the few requirements. It’s definitely not meant to be a replacement for income if you lose your job. It’s also not meant to be used for gambling or risky investments.
Reasons for Using Payday Loans
- Medical emergencies
- Pay for school books
- Go on a short inexpensive vacation
- Buy Christmas or birthday gifts for loved ones
- Purchase a new computer