Payday loans can be a good way to help out during a financial crisis or some type of emergency that you need fast cash. Payday loans are short-term loans meant to help borrowers get through until their next paycheck and are generally easy to be approved for. Not only are they helpful for bills and extra spending money, payday loans can actually help improve your credit score.
Instructions
1. Take out a payday loan that you can easily afford to pay back on time. This will look good to the credit companies that handle your rating. When you are approved, your personal credit report will reflect that you have more credit, which should increase the credit to debit ratio.
2. Pay the loan back before you have to. Many payday loan companies allow you to come in any time and repay the loan, which can help improve your credit. Some companies even waive the fee if you re-pay your loan within a certain time period, such as two or three days.
3. Apply for a payday loan to pay off other debt, such as credit cards or utility bills. Most times, the interest rate on a credit card is higher than that of a payday loan, so it makes sense to use a loan to pay it off. You can also use a payday loan to catch up on other bills that can cause your credit score to decrease.
4. Take advantage of the fact that a payday lender does not typically check your credit score to give you a loan. You can get the money that you need fast to pay off the bills that do affect your credit so that your credit improves.
5. Apply for a payday loan instead of a bank loan to improve your credit score. If you have trouble paying back what you borrowed to a lender, they may work with you to extend your loan, with no backlash on your credit. With a traditional bank loan, you won't have as much leeway. However, if the payday lender does not extend your loan and you miss a payment, they can charge you a rather large late fee as well.
6. Take out a payday loan and use the money to open a secured credit card. These credit cards require that you apply your own money to them, and then you use your own balance to make purchases. You can then build your credit by making sure you pay on the credit card each month. This is an excellent way for someone who has no credit to get started. Just be sure to pay at least the minimum balance on the credit card to avoid hefty late fees.
