Do You Need a Good Credit for a Payday Loan?
Payday loans are short-term financing without any collateral pledging. These are popular because they give access to cash really fast with online applications. On the other hand, a credit score is the numerical reflection (varies between 300 to 850) of a person’s borrowing practice or credit history. If someone does not pay off debts, obviously the credit report- prepared by credit bureaus such as TransUnion, Equifax and Experian and others- records it as a bad practice and the credit score becomes bad. It is always desirable to have the credit score closer to 850; more than 650 is fair.
Having a low credit rating might not help one avail loans such as a mortgage or auto loan. However, payday lenders do not require a good credit. Quite a many lenders, including EZPadayCash, do not even bother to run through credit to approve payday loans. That means your credit score does not have any impact on your chances of getting a payday cash advance. But do payday loans impact your credit history? Do they help build your credit?
Can Payday Loans Actually Help You Build Credit?
According to the Consumer Financial Protection Bureau (CFPB), most payday lenders do not report the lending-borrowing activities to the credit bureaus. Therefore, building a credit history depending on payday loans is not usual. However, there are some lenders who report to the credit rating agencies if a borrower is approved with a payday cash loan. In those cases, if the borrower makes the scheduled payment on time, it makes the credit report look healthy. On the contrary, if the borrower fails to pay off the loan by the due date, the credit report is impacted negatively.
Now, those lenders who do not report the borrower taking out a payday advance, deploy debt collectors to recover the loan from the debtors when the debtors do not make payments. Then, the debt collector might report the default to the credit agencies, and that might hurt the credit rating of the borrower. This ultimately makes availing a fresh payday loan in future difficult because of the delinquent behavior. Therefore, repayment of a payroll loan should be a priority of the borrowers.