Nowadays you need to have established credit to qualify for a low limit credit card or even an auto loan on a used car. So, if you’ve just turned 18 and you need a car to get to work, you either have to have a cosigner or find alternate means of transportation until you are able to qualify for a car loan. This is probably why a good number of people are open to taking out payday loans just to get a helping hand when they have financial issues.
Although a payday loan can be obtained without credit, if you default on it you will end up with a severe blemish on your credit report. Going to CreditRepairCompanies.com will give you the chance to work on repairing credit if you need help. Otherwise, see what’s in your credit file first and learn how you can use payday loans to your advantage instead of having them lower your FICO score.
Choosing Payday Loans Based on Repayment Options
The first time that you qualify for a payday loan, you could be offered a lot more money than you applied for. Most people would immediately think of how they could hederatech use a few extra thousand dollars to put toward bills, or even go on vacation without considering that they are going to have to pay back the loan. Instead of calculating how much you need, look at what your repayment schedule is going to do to your budget. Can you afford to pay back a payday loan on a weekly basis? Are you going to be able to keep paying on a payday loan over the next six months at a minimum with no breaks? Prior to taking out any type of loan, consider how it is going to impact your finances and you will maintain a higher credit score.
What Can You Do Before You Default on Your Payday Loan?
If you stop paying on your payday loan, you will quickly see your payments ballooning. Consumers who have other emergency expenses, or even find that their paychecks are short, might need to decide between maintaining their payday loan repayment schedule or keeping the lights on in their homes. In most cases, one late payment should be able to be resolved with a quick phone call. Your payday loan company might waive the charges or reduce the amount of interest you will pay in penalties if you are proactive rather than reactive. In other words, don’t let your payday loan company find out that you are late making payments and expect them to be forgiving.
Clearing Payday Loan Debts Off of Your Credit Report
Maybe you have a payday loan debt appearing on your credit report from several years ago and you want to go into the future with a clean slate. Since payday loans tend to be very high interest, you might experience shock when you see that a payday loan for $500 that you partially paid off has ballooned into a debt of several thousand dollars. In addition, any debts that make it to collections will have additional fees and penalties added. So, in short, you’re going to either need to pay off your defaulted payday loans in one fell swoop or offer some sort of repayment plan that you are sure you can maintain this time around. If you are really lucky, you will be able to negotiate with your payday loan company for a pay for delete, which basically means that the entire tradeline will disappear as a result of your full repayment. Remember to get a promise like this in writing as having a paid collection is going to be damaging to your credit history.
Is It Really Your Payday Loan Debt?
There’s also the possibility that a payday loan tradeline on your credit report doesn’t belong to you at all. If you have a common name, or if someone has committed identity fraud, you might have tradelines appearing on your credit report that you have no prior knowledge of. The good news is that consumers are able to dispute false information that appears on their credit reports, usually with positive results in less than 30 days. As a consumer, you have a right to request debt validation from any company that claims you are indebted. You can ask to see a copy of the original contract that has your legal signature, ask to receive billing statements, and look over what information is sent to determine if you legally owe a payday loan debt. This advice is not for consumers looking to get out of paying debts that they know they are responsible for. Instead, you should always look to work out favorable repayment options instead of lying in order to improve your credit file.
Be Careful About Your Social Security Number
In order to have a debt or tradeline listed on your credit report, the furnishing party, or creditor, has to have quite a bit of information about you. In addition to your name and address, they’ll need access to information such as your date of birth and social security number before a credit reporting bureau will accept a new tradeline. To prevent any information that you don’t want to appear on your credit file, you need to keep a tight grip on your identifying information. Be careful about where you apply for payday loans and always ask how long your personal information is kept on file prior to sending in an application.
Taking out a payday loan can get you out of a financial jam, but you never want to allow a financial decision you make today to impact you negatively as you get older. The simple trick is to never borrow money from any entity that you can’t comfortably repay. Additionally, never take out another payday loan to pay off a loan that you owe to a different company. Once you resolve your financial emergency and have your payday loan repaid, you won’t have any type of impact on your credit score.