Do Payday Loans Affect Your Credit?
Payday loans are loans that are made out to customers until they receive their next pay check. The basic idea is that you will repay back the loan once you get your next employment check. The payday loan company usually holds a post dated and signed check for a period of up to 30 days until the loan is paid in full. Payday loans may affect your credit but this statement is based on many factors. There are also situations where payday loans may not affect your credit. Let us examine some reasons why payday loans may affect your credit and some reasons why taking out payday loans may not affect your credit. You can read on for these reasons or get a payday loan from a reputable company now.
Federal, State, and Local PayDay Laws
The payday loan industry has been faced with stiff opposition from the federal, state, and local governments and part of the reason is due to the high interest rates that are placed on payday loans. Check with your local district attorney to find out what are the laws in your area. If you fail to pay back the loan, the company can take you to court in most states and file a civil judgment against you which will affect your credit. Legally, they are allowed to charge these high interest rates because they are not considered credit card companies. However, when you are strapped for money, a quick personal loan may be necessary.
Social Security Numbers and Payday Loans
When you fill out an application for a payday loan, if you are asked for your social security number, then most likely the payday loan will affect your credit because credit bureaus use this number to identify persons in their databases. So, read the fine print on the application carefully before you sign for a payday loan. Review all additional paperwork that you are asked to sign.
Will Payday Companies Do a Credit Check?
Some payday loan companies will tell you that they do not run credit reports. So, you will have to do research to verify this information. You can contact your state’s attorney general’s office to find out if a payday loan company can check your credit. Taking out a payday loan at some companies may not affect your credit all. Reputable lending companies will follow state laws so make sure to do your research.
The Bottom Line
There are many factors to consider when taking out a payday loan if you want to protect your credit. Payday loans may affect your credit but it depends on your state’s lending laws. States have different rules and regulations. The payday application process may request a credit check or the company may not require a credit check. It is up to your own research to find the companies that do not. Get a reputable payday loan now.
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