Payday Loan Users: How to Improve Your Credit Score

The payday loan lending industry offers a valuable service to people who don't have much in the way of other options. If your credit score is already in bad shape, there may be a few traditional lenders who are willing to give you a chance but most often they want to see good credit scores. If you do get approved by a bank or credit union, you will have the opportunity to demonstrate that you are able to handle money responsibly and therefore working to raise your credit score. But what happens if you don't get approved by your bank or credit union?

A payday loan makes a great stopgap option but your ultimate goal should be to repair your credit rating so that when the time comes and you do want to open a line of credit for whatever reason, you have the option to do so. In the meantime, you have the option to utilize short-term lending as a means of getting through a temporary financial crisis.

The first thing that you need to do is to make sure that you look at a situation very carefully before deciding that a no credit check payday loan is the right solution. This is an excellent way to get money quickly and it can free you from the worry that you'll be judged or rejected based on your past credit history. However, borrowing money from a professional lender always has costs. If there is any possibility that you can do without something, borrow a needed item from someone else for a while. Arrange to get a ride with someone else to work until you have the money to fix your car. Put off the home remodel until you have the cash in hand. Refrain from buying that big-screen TV that you don't really need. Often times our credit scores are a reflection of how much will power we have when it comes to spending. Good habits equal good scores.

There may be times, though, when getting a bad credit payday loan maybe your only option. If your alternative is to end up being overdue on paying a bill or avoiding late fees, interest charges, having utilities cut off, and reactivation fees, a short-term loan from a payday loan provider may be necessary. The actual cost of borrowing the money compared to the potential cost of the other fees may make sense. Just make sure you are able to pay back what you part in a short amount of time. Most lenders want to be paid back with your next paycheck but often times they will work with you to give you more time for repayment. This is called a "rollover".

Using a low fee payday loan can also help you to protect and build your credit rating. For example, if a payday loan allows you to pay your electric bill on time, the possibility of your utility company reporting you negatively to the credit bureaus will be lowered. While you may be spending money to get the payday loan, protecting your credit score and giving it time to improve will make borrowing more available and affordable in the future.

Your credit score is intended to be a way that lenders can quickly assess how likely it is that you will repay them on time as you've agreed to do. When your credit history is already spotty, one of the most important steps you can take is to stop adding to the damage. As your mistakes move farther into the past, they have less of an impact on the way you are scored and your number begins to rise. A payday loan can save you from losing this hard-won progress by allowing you to stay current with your payments so that no brand new negative information ends up on your report.

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