Expert Debt Management
Expert Debt Management
How Payday Loans Can Save Your Credit Score
You might probably have heard that payday loans are sort of lifesavers in moments when you need cash here and now, in fact you may have already applied for one to get resolved a money emergency that took place before your payday. However, what you may not know is that many people use payday loans for a different purpose; get their credit score improved.
Effectively, when someone has a poor credit history, bad credit history, or no credit history at all, applying for a payday loan is the only road to get cash from a lender, as payday loans are granted upon paychecks rather than credit background. This way, if an individual apply for a payday loan, there will not be any credit check performed, and invariably the application will be approved, unless the person is unemployed because the paycheck is what secures the loan.
What Payday Loans Can Do for You
Besides helping you to get the cash needed before your payday, cash advance loans can serve for the purpose to save your credit score. In this case, you do not need to have a real necessity to borrow money, but you can still do it and reserve it with the sole purpose to get the payday loan company reporting positively to the credit bureaus by the time of your payday.
Extra Money is Not Good Money
The key factor to make payday loans save your credit score is keeping in mind that you are not getting extra money, but an extra amount of money that you have to pay back. Because the goal is improving your credit score in this case, you must not risk to interest rates the maneuver that you have in mind. So if you borrow money to save it until payday, by the time to repay the lender, you will be certain to pay with your paycheck and have that money you borrowed to cover any amount that interest rate and finance fees taken out of your expectations. This is normally what occurs when payday loans are taken out when simply money is needed. Payday loan fees are actually among the lowest compared to overdraft and bounced checks.
Planning Your Payday Strategy
Many people may consider useless to apply for a payday loan if the money gotten in advance will not be used for any purpose, but to wait for the payday. However, this is a good strategy to prevent a slap back in your estimated expenses against the money you will get from your paycheck and the money you have to use to repay the debt.
Consider that when one is flagged by negative credit score, apply for cheaper loans or credit cards is almost impossible. By playing safe borrowing money with the sole purpose to repay timely, you can improve your credit score overtime, as you can apply for payday loans more than once.
Nonetheless, before running, learn to walk. Avoid to have more than one outstanding loan even if you are allowed to have more than one, and do not apply for one after another. This is not only forbidden in some states, but also is not convenient in your credit history, as many creditors may find a "suspicious" pattern in your credit report if they take care to look in detail your credit score.
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