Handle Payday Loans Smartly So That It Does Not Impact Your Credit Rating
Financial emergencies can crop up any time when you might need extra cash quickly. With payday loans, getting quick money within a couple of hours is quite easy these days. A direct short-term lender is probably the quickest way that can get you quick cash. However, payday loans can have a certain impact on your credit score, and hence, it is important to understand the concept very well.
Looking for a direct short-term lender
If you need payday loans to cover an unexpected bill or any unforeseen expenditure, LoanPighelps in resolving your situation in no time. They are UK’s best online payday loans direct lenders with a fast application process and flexibility to choose the amount and repayment term needed for up to £1500.
They use innovative technology for a fast and simple application process welcoming all credit histories and assuring that every customer gets a short-term loan as quickly and effortlessly as possible. Apply for payday loans with LoanPig and once approved, you can use the funds the same day itself.
What are credit scores?
Credit scores are calculated as a measure of reliability by lenders. Whether it is a payday loan or a mortgage, lenders always want to know if you can repay the loan. Your credit score is generated depending on the loan amount you have taken and the time limit within which you paid back.
- You will have an excellent credit score if you have borrowed money and repaid it on time.
- Your credit score drops if you have borrowed money and did not repay it on time.
Factors that affect your credit ratings
There are a lot of factors that influence your credit score:
- The amount of credit used
- The time of your credit history
Your credit ratings may affect if you have a credit card and you get close to your credit limit frequently. On the contrary, you can have a good credit score if you borrow less than 30% of your credit limit and pay it back on time. This allows the lender to know that you are usually not dependent on loans and are likely to repay on time. Similarly, your credit ratings will be great if you have a longer credit history.
How does a payday loan improve your credit rating?
The purpose of a credit score is to know how reliable you are for future loans and can repay them. Repaying the loan on time proves your ability which is then reflected in your credit rating. Payday loans can improve your credit rating. Your credit score gets better if you apply for a loan, get funds and repay it within the time as agreed with your lender.
However, your credit score decreases if you don’t pay back on time. Late repayments could also result in serious debt issues. Therefore, before you apply for a payday loan, you need to have clarity if you will be able to pay it back on time. As the debt amount increases, your credit score gets affected negatively.
Payday loans affect your credit ratings either positively or negatively depending on the way you handle your loan. Therefore, it is advisable to apply for payday loans only as much needed that you know can repay.