Quick Quid - helps or harms a credit score?

Hi all,

I'd appreciate your expertise on payday loans such as Quick Quid etc.

I've got a couple of friends who say two different things - one claims that they mess up a credit file even if the loan is paid off in full and on time or early, and the other one tells me that these loans help to improve credit scores especially when taken out quite frequently ie. every month on large amounts such as £1,200. He stressed to pay it off within 2-3 days as interests are about 1% daily so it's an expensive but effective way to boost one's credit score.

Please advise, thank you!

Comments

  • takman
    takman Posts: 3,876
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    thomasfox wrote: »
    Hi all,

    I'd appreciate your expertise on payday loans such as Quick Quid etc.

    I've got a couple of friends who say two different things - one claims that they mess up a credit file even if the loan is paid off in full and on time or early, and the other one tells me that these loans help to improve credit scores especially when taken out quite frequently ie. every month on large amounts such as £1,200. He stressed to pay it off within 2-3 days as interests are about 1% daily so it's an expensive but effective way to boost one's credit score.

    Please advise, thank you!

    Loans like this hotel into the category of "short term loans" on your credit file. These loans are looked to be bad from lenders because you only take them out when your desperate. So taking one out each month will look like you are short of money each month and make it very difficult to get credit at a good rate in the future.
  • Ben8282
    Ben8282 Posts: 4,821
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    Very bad. Very harmful. Avoid like the plague.
  • Thanks guys!
  • Malmo
    Malmo Posts: 710
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    Any form of short term lending like this is detrimental to your credit history. Some lenders automatically decline if there is a payday loan in the last 12 months.
  • hsnyldz
    hsnyldz Posts: 19 Forumite
    Avoid! Ask a friend a family member, your mother your father instead.
  • Dobbibill
    Dobbibill Posts: 4,133
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    PDLs show lenders you are unable to budget from one payday to the other and need help doing it.

    Another vote to avoid!!!!!!

    Your friend who is telling you they are good for your CR may be trying to convince/justify it to themselves rather than you.
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  • Even if it helped your score (which it does not), I wouldn't take a loan and pay an inordinate amount of interest for the sake of building my credit profile.
  • smdabs
    smdabs Posts: 100 Forumite
    While if you pay on time, your credit file itself would not be harmed, a lender can see who your accounts are with and whether they were short term loans.


    From a banking perspective, as soon as they see a payday loan, it is a huge indicator of financial difficulty. So while an autoscore (e.g. online credit application), may not show any negative markers (as long as you've made payments on time), if you wanted to apply for a mortgage, and the payday loans were found - they may well decline your application.
  • boo_star
    boo_star Posts: 3,202
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    smdabs wrote: »
    While if you pay on time, your credit file itself would not be harmed, a lender can see who your accounts are with and whether they were short term loans.


    From a banking perspective, as soon as they see a payday loan, it is a huge indicator of financial difficulty. So while an autoscore (e.g. online credit application), may not show any negative markers (as long as you've made payments on time), if you wanted to apply for a mortgage, and the payday loans were found - they may well decline your application.

    Automated systems can easily pick up on payday loans, they now have their own category.

    I agree that mortgages will be a problem but I imagine many high street lenders will have issues with payday loans for credit cards, overdrafts and loans as well.
  • takman
    takman Posts: 3,876
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    smdabs wrote: »
    While if you pay on time, your credit file itself would not be harmed, a lender can see who your accounts are with and whether they were short term loans.


    From a banking perspective, as soon as they see a payday loan, it is a huge indicator of financial difficulty. So while an autoscore (e.g. online credit application), may not show any negative markers (as long as you've made payments on time), if you wanted to apply for a mortgage, and the payday loans were found - they may well decline your application.

    This is incorrect a lender can't see who your accounts are with they can only see the loans in each category and amounts. So a short term loan will always be a negative no matter what you are applying for. I have never seen any lender say that it is positive if you pay it off in time and even the payday loan companies say that just having the loan will be a negative on your credit file.
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