Do Payday Loans Build Credit?
Payday loans are often seen as an option for those that need to borrow cash while not having the greatest credit history in the world. But, do payday loans build credit? That's what we want to take a look at on this page.
Do Payday Loans Build Credit? The Answer Is…
No. Payday loans are loans designed to cover emergency expenses. They are not credit builder loans.
Most payday loans are not going to be reported to credit rating agencies. This means that when the payday loan is paid off, there will be no record that you have made those payments. At least, not in any credit scoring records.
This means that if you are considering payday loans purely for the purposes of building credit, then avoid them. These loans are not for you, and there are plenty of other credit-building options out there. We cannot stress enough that payday loans are purely for emergency expenses.
Payday Loans May Not Reduce Credit Either
On the other hand, payday loans may not necessarily reduce your credit score either.
Unlike most types of loans, a payday loan is rarely issued on the strength of your credit history. Instead, it is going to be issued on the strength of your current financial system e.g. the income that you have, how stable it is, etc.
Credit checks may be carried out, but this is going to be rarer in the case of payday loans (it will be dependent on how risky you are seen as). If no credit check is carried out, then there will be no reference to it on your credit report. This means that you are not going to see a reduction in your credit score either. Basically, the payday loan has very little impact on you at all.
Of course, there are still limited situations where you may see a negative impact on your credit score. This may include if you fail to pay the loan back. However, this is going to be the same no matter what type of loan you get.
Payday Loans Not Impacting Credit Could Work To Your Advantage
Of course, the payday loan not impacting your credit score could have a few major advantages.
The major one is that you may be able to get a payday loan even if you are not in the best credit position. While other loan options may be out of your reach, a payday loan may still provide you with the opportunity to borrow cash, providing you have an income. This means that you may not have to fret so much about your emergency expenses.
Because a payday loan is unlikely to come up on your credit history, you also don't need to worry about undoing all of the hard work that you have put into building up your credit score. This is not the case with other loans. If you get another type of loan (e.g. from a traditional bank), then even searches on your credit report will result in a reduction in your score, even if you do not end up taking out a loan.
Remember, inquiring is not going to have a negative impact on you, and the team here at Cash Cow are more than happy to give you a bit more information about the lending process that we follow. We will even let you know whether we will need to carry out a credit check for your payday loan which, as we said, is rare.
How Do You Get A Bad Credit Payday Loan?
In order to get a bad credit payday loan from Cash Cow, you will need the following:
- Driver's license or other government-issued ID
- Your most recent pay stub
- A blank check from an active checking account in your name.
If you have that, then the rest of the inquiry process should be smooth sailing. In fact, with Cash Cow, you could know whether you have been approved for a payday loan in under an hour. Depending on your bank, you could have the cash the very same or the next business day.
We ensure that our process is predictable, which means everything begins by filling out our quick online inquiry form. You can find this form on our website. It just lets us know that you want a payday loan. A short while after, we will give you a call to let you know more about the process.
If you wish to continue with your inquiry, you will be asked to come to your local Cash Cow location. Bring along your documents. We will carry out a few checks and let you know whether you have been approved. If you have, you just need to sign your loan agreement and wait for your cash.
Get A Payday Loan Today
Do payday loans build credit? No, they don't. However, they are also unlikely to have a negative impact on your credit score either. A bad credit payday loan is for those that need to borrow cash in an emergency, but don't have a credit score that would make them appealing to other lenders. If you need cash today, get started by filling in the inquiry form on our website.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.