Credit ratings and payday loans – What you need to know

Credit ratings and payday loans – What you need to know
September 12, 2014 Chris
Payday Loans and Credit Ratings

Your credit ratings are some of the most important records about your financial situation. It’s an estimation of your ability to fulfill financial commitments. An estimate based on the way you’ve handled previous financial arrangements.

What will they look at on  your credit ratings?

When applying for credit, most lenders will look at and analyse your credit score. They’ll weigh up all the information available to ensure that your borrowing is affordable.

There are many factors that can affect your credit ratings. These can include whether you’ve defaulted on a loan or made late credit card repayments. This also applies if you’ve gone over your credit limit or never had any kind of credit at all.

Making sure your credit rating is good requires a fine balance. You must first make sure you have some credit to your name.  Moreover you should avoid situations where you’re missing payments.

Payday loan applications will go on your credit file as will the successful repayment of the loan. This can be a good way to show your ability to handle short-term credit arrangements.

Repaying payday loans on time could have a positive effect on your credit score. It will show that you are a reliable borrower and able to meet the commitment of repaying the loan on time.

Can you handle the risk well?

Remember, lenders look at credit ratings for an idea of how you handle the profit and risk balance. Lenders tend to not want to lend to anyone who demonstrates they’re a credit risk. Also, they’re looking for the ability to make a profit.

That’s why those who move balances from 0% credit cards to another could find their credit rating is poor. It may save you paying any money, but it also means the credit company gets no interest payments. This makes you an unattractive party to extend credit to.

How to apply

If you’d like to apply for payday loans then this is simple to do and takes just a matter of minutes. Fill out the online application and you’ll get a near instant decision on whether you’re approved. It’s worth remembering to be in employment when applying for payday loans. You also must be at least 18, a UK resident and with a UK bank account.

A key part of making payday loans work for you is ensuring that you borrow and repay on time. So, before you apply for the loan make sure that it will work with your personal finances. This means looking at your incomings and outgoings. It’s worth doing this over the span of a month.  This will help you ensure that, there will be enough to cover the loan repayment and the interest.

Final thoughts

Once you’re on top of your budgeting you can take the first steps towards making payday loans work for you. It can be a juggling act but with the right info, can be a blessing in disguise.