Often people raise this question whether payday loans can be used to boost your credit rating and in this blog post we shall try to answer this question.
Payday loans are one of the fastest growing loans available today. Though sometimes APR rate can go very high, but many people are taking it for something more than just borrowing funds for their needs like boosting their credit rating. To learn how it helps to boost your credit score, you could visit https://loanpig.co.uk and get other related info.
Let us know about few facts regarding payday lending and also credit scores.
Your payday loan applications will surely go to your credit file, as the lenders will wish to know about how you quickly pay it off. They are more concerned about how will you be clearing off the loan, rather than checking only your credit scores. It is good for you in a way, because clearing of loans with timely instalments will help in gradually improving your scores.
Credit scoring usually works on the basis of ‘behavioural predication’, which means how you had behaved in the past will predict your possible future behaviour. It also helps the lenders in calculating if they can make money out of you.
Generally, by paying off all your credit right on time will show that you are more reliable, and thus this will have a positive impact on your credit report. All banks and financial institutes check your credit history before giving you any kind of loan.
Technically obtaining payday loan can help in boosting your credit score that can make it cheaper and easier to get mortgage. However, we will still caution you very strongly about using payday loan for that purpose due to following reason.
Usually payday loans are pretty expensive and also risky. The interest rates can be too high, while actual cost for short term finance may be not too bad, but the longer you delay the repayment, the difficult it will become for you.
There is another way to achieve that much better and also for free. There are number of ways to boost up the credit worthiness in order to help in rebuilding your credit score.
One thing that you can do is by obtaining some other forms of credit products and then paying them back within the rules. One of the best ways of doing that is by paying all your dues of credit card in timely manner.
Instead of paying the minimum amount payable for credit card you should try to repay the full amount within due dates which can be much better way to boost up your credit rating.
Many of you must be thinking how to obtain credit card if your credit worthiness is relatively poor.
There are few special cards available that have higher rate of interest but in any case, the interest rate will be totally irrelevant to you if you have decided to repay in full.
Thus, you can see that by using payday loan for boosting your credit score may not be too smart idea rather it has many other risks also in the future.