- Wed Nov 27, 2013 12:04 am
This is from Experian and is their comment on just this
If you repay the payday loan on time and in full then any effect on your credit rating could be positive. When lenders check your credit report they are looking for evidence that you are a responsible borrower. Repaying a payday loan on time and in full should therefore strengthen your case, because many payday and other short-term loan providers are now sharing customer records with Experian. Saying that, some lenders might see the fact that you’ve taken out a payday loan as a sign that your finances are under pressure. Importantly, lenders’ scoring systems are built by modelling actual customer data. As a result, if a particular lender’s experience is that customers who take out payday loans are more likely to miss their repayments, this will be reflected in their credit scoring. Actually, some of the lenders that use Experian for credit checks don’t currently differentiate between payday and other types of loans, so they wouldn’t be able to discriminate anyway. So if you do take out a payday loan, just concentrate on paying it back on time and you shouldn’t hopefully have any problems.
Reading between the line with this, Experian are strongly hinting that one or two paid of promptly and fully ON TIME, should not effect, but continuous use will raise alarms.
Sarah is 100% right here, and this definitely is reflected in the view of the CRAs.
As you know lenders have their own Scoring Systems, and differnt ones will give different weight to PayDay loans, most will very lightly count one or two over a tracked period, but others can just as easily wont touch you at all!
So there is no easy yes or no, but very much a muddy maybe.