One of the major things we hoped to accomplish when creating this blog was to help people understand the negatives and positives of getting a cash loan. Understanding how a payday loan affects your credit score can help you make the decision if you should end up applying for a short term loan.
How can a payday loan affect your credit score?
When applying for a short term loan or payday advance, your credit score is checked. While you do not need to have a high credit score to get approved for a loan, your score is reviewed by the loan lending companies. It’s true you can get a loan with a bad credit score but did you know your credit score actually affects your interest rate? If you have a bad credit score, your interest rate is actually going to be higher and you may also have a shorter time period to pay back your loan.
The biggest way a payday loan can affect your credit score is on your ability to pay back the loan. If you take out a loan and end up missing payments, the loan lending companies will report your inability to pay the loan back and end up lowering your credit score.
When getting a payday loan, you need to make sure you have the ability to pay the loan back. If you miss a payment you could end up owing a lot of money with a higher interest rate and also end up hurting your credit score. When you miss a payment, you will end up with a lower credit score. The lower your credit score, the less likely you will be to get any other type of loan.
The point is, when you need cash, a payday advance can be a good option. But you need to make sure you have the ability to pay back the loan on time. If you do not or cannot, you will end up owing more money and with a lower credit score.