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MSE News: Wonga: Payday loans 'do wonders' for your credit rating... really?
Former_MSE_Helen
Posts: 2,382 Forumite
in Loans
"The reality is often the opposite as many lenders view the fact you've used a payday or short term loan as a negative..."
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Comments
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Taking out any loan which isn't in the single figure APR category suggests either a gross naivety of money or an unhealthy obsession with consumerism and inability to delay material gratification. There may be occasional exceptions, but taking out high APR loans should be once in a lifetime events at most.
Taking out a pay-day loan at thousands of percent, makes about as much sense as chopping of your arm to prevent your finger bleeding. The financiers which prey on people with these will one day viewed like medieval quacks.0 -
Very interesting story! Payday loan companies certainley do not warn of the detromental effect taking their loans could have on your credit status - People who take these loans arent neccessarily cash hungry but due to the current financial climate and lenders not lending these sorts of loans are the only one's available to a lot of people. Just note the amount of payday loan companies there are now! Its a massive money making market!! This statement that having these loans can do "wonders for your credit rating" sounds ludicrous and is totally misleading - these companies need to be taken in check imo!0
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“Official Company Representative
I am an official company representative of Experian. MSE has given permission for me to post in response to queries about the company, so that I can help solve issues. You can see my name on the companies with permission to post list. I am not allowed to tout for business at all. If you believe I am please report it to forumteam@moneysavingexpert.com This does NOT imply any form of approval of my company or its products by MSE"
Posts by James Jones, Neil Stone, Stuart Storey & Joe Standen0 -
Experian_company_representative wrote: »
And this is coming from a company(Experian) who rips customers off on a daily basis with their meaningless so called £15 credit scores when in essence they don't lend money which infact means void.
James jones and his Experian chums should be investigated if you ask me as their misleading tactics are no different to a loan broker asking for an upfront fee.0 -
Bugsy i agree - they charge £7.99 for access to information about YOU - then they have the cheek to charge a further £5.95 for a score that is basically a guess and means nothing - even if the score they rate you as is 999 excellent - if you have a bad past with RBS for example they wont lend you any money no matter what experian score you as - the whole Experian and equifax credit agencies are full of so many holes its unblieveable!!!!0
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I guess that's true compared to repaying your Wonga loan late!Wonga's email to customers says: "Repaying your Wonga loan on time does wonders for your credit rating!"0 -
Taking out any pay day loan says either:
I'm maxed out on my credit card and overdraft and my bank won't extend it.
Or.....
I'm so badly organised that I can't arrange an authorised overdraft during banking hours so have to resort to Wonga's 24/7 service.
Either way this has to be negative for your credit rating.
As a society we have to ask ourselves whether Wonga and their like provide any useful service or actually whether their 'profits' are actually losses from parents, friends or other financial services companies who have to bail Wonga customers out when inevitably they get into difficulty.
The 'minority' of customers who genuinely benefit is so small in my view it doesn't justify the damage being caused to the majority and any lending whether the customer has to pay back more than twice what is borrowed when measured over a year should be banned. i.e. No APR over 100%
R.Smile
, it makes people wonder what you have been up to.0 -
Do you know that would rule out many high street banks' arranged overdraft charges? It's not only the payday loan companies who use such high APRs.any lending whether the customer has to pay back more than twice what is borrowed when measured over a year should be banned. i.e. No APR over 100%0 -
Mmm ... Mortgage companies don't like it if you have regular loans, overdrafts, credit card balances or even unused credit lines. Add pay day loans to that list.0
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JimmyTheWig wrote: »Do you know that would rule out many high street banks' arranged overdraft charges? It's not only the payday loan companies who use such high APRs.
That was kind of my point Jimmy,
Don't have a problem with a bank covering its costs for setting up a loan in the first place. But charging this fee, on top of interest, for what is essentially a rolling facility is just profiteering in my view - and this is what most overdrafts and pay day loans become.
If a bank or loan company needs to charge more than £500 in interest and charges in a 12 month period for a £500 loan or overdraft to cover costs and losses for customers who can't repay, I'm questioning whether the money should even be lent in the first place.
My view is that it is socially destructive. In otherwords the value of the loan to the customer is less than the cost of all the social problems these loans cause for family, friends and the borrower themselves.
RSmile, it makes people wonder what you have been up to.0
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