Payday lenders don't typically perform credit checks on applicants, so requesting one won't appear as a harsh query on your credit report and they won't notify credit reporting agencies when you receive one.
Payday loansare generally not reported to the top three national credit reporting companies, so they are unlikely to affect your credit ratings. The answer here is “no, with one small caveat. Payday cash advances are part of a subset of bad credit loans called “loans without credit checks”.
Since these lenders without credit checks do not perform any checks of your credit history during the application process, they do not report your payment information to the credit bureaus either. The answer? Most payday lenders perform a Yes check, even Net Pay Advance will, from time to time, perform a credit check. But it's not a credit check like you've heard of before. It's called a soft credit check, and its function and purpose are very different from what you might be used to.
When you don't pay your payday loan (which studies have shown that up to half of borrowers do eventually), your lender has several ways to try to collect. It's not your credit score that always matters, even more so the big picture of your money coming in and out plus any obligations you have to other loans or credit cards. Like payday loans, these “cash advance loans” are advertised as an “advance on the borrower's next paycheck.” If the loan you are trying to withdraw is not due to an error and belongs to your credit report, it will be much more difficult to withdraw it. If you lose a court case related to your payday loan, that information could appear on your credit reports and could lower your credit score.
For example, long-term loans, such as student loans and mortgages, carry relatively little weight, while credit cards have a “standard amount of weight.” But just like any unpaid bill, loan, or credit account, not paying a payday loan on time can affect your credit score. Each state's laws are different and, in fact, payday loans are illegal in several states, so there could also be help there. If you ever stop paying off a payday loan, you'll see a significant impact on your credit score one way or another. Tough measures are required when a lender needs to review your credit history before determining if you are eligible for a loan.
This means that, if you run into a rough patch with your payday loan, there are steps you can take to alleviate the damage. In the long term, you can also work to fix the underlying financial issues that lead you to a payday loan counter. That said, there are several ways to fix your credit or withdraw a payday loan (or any other debt) from your credit report. But while payday loans can provide much-needed emergency cash, there are dangers you should be aware of.
There are a lot of misconceptions about how this can affect your credit rating, so let's examine how a payday loan and other loan products can help or hurt you.