Payday loans and credit files

sofababe

I've noticed over the last few weeks a huge increase of posts about payday loans. Luckily I have no experience of these but I was wondering this......

So many people struggle to pay them back, don't want to default obviously, pay them back then have to get another a few days later as repaying the first one has swallowed all their income. Posters say they don't want to default as it will wreck their credit file but surely having application after application over weeks and months for these loans is going to look bad on your file and put off any lender as it clearly shows you have trouble managing the money you have.

I stand to be corrected, please do so if I'm wrong.

Tixy

I think a lot of payday loan companies don't report to the CRAs.
Some report but only report negatives.
Others might report everything and then I would imagine that would usually produce a lot of activity as you suggest. Though of course other lenders won't necessarily know that these are payday loans (as they don't see the other creditors names).

seddo1984

Please please please DO NOT use these companies!! My girlfriend and I are in debt to these companies. Even if you are in a mess and need cash quick i would urge everybody not to use them!

KingElvis

I would say a high percetage of people who take these loans couldn't give a fig's fanny about their credit rating anyway.

Also, so many of these will default that the computers at the CRAs would probably explode :rotfl:

eyeopener2

seddo1984 wrote: »

Please please please DO NOT use these companies!! My girlfriend and I are in debt to these companies. Even if you are in a mess and need cash quick i would urge everybody not to use them!

Keep saying this

Do not use these companies, ever.

(Oh, and Blackpool FC are sponsered by one of these things and should be ashamed)

Percy1983

I wouldn't say don't use them, just think about it before you do.

EG, if I had a direct debt which would bounce and end up costing me £30 in fees plus a blemish on my credit file, paying one of these companies £15 to cover it for a few days wouldn't be a bad idea. But a situation like this should be a one off due to a valid reason, if I am just living beyond my means of course the poo will hit the fan eventually.

sofababe

I also wonder why it seems that so many more people are taking them out. Maybe its just me not noticing previously but it seems to be more common recently. I know at least one of the PDL companies has been advertising on telly but haven't seen that ad for a while. I simply can't imagine what possesses people to take these damned things out. Desperation I guess:(
I've had and still have (but not for much longer :j) Provident loans which are bad enough. More regulation is what's needed I suppose.

bluejeans53

Sofababe, just wanted to say, have you ever been desperately desperately desperate for money ? Of course these are not a good idea but when your back is against the wall its easy money. "thats" what "possesses people" " like me to get them out. Luckily i am in a situation to clear mine this month. I do hope you never find yourself ever in this situation...........Sorry I just felt a bit got at by your last post. I know I have been stupid and so does everyone else who has them. I do not need, putting down about it. thats how you post made me feel.

Dont mean to offend you, as I am sure you did not mean to offend me, its just how it reads.

eyeopener2

I found myself in that desperate situation but then couldn't pay it back, so rolled over. Then took another one, then another one, then another one. Four Payday loans and no way of paying them back.

I was stupid, and i'm paying the consequences of those actions which is why I say don't do it.

saltnvinegar

Hi Sofababe

I think this is an interesting post and a good observation.

Bluejeans - I don't think that Sofababe meant this in the way you think as I read it in a very different way I really don't think SB was trying to put you down

The way I read this was more a question on why should you be worried about a default affecting your credit score, when multiple applications for credit on a score would have a similar affect.

In terms of why there have been many posts the last week or so?

Maybe it was because it was getting towards the end of the month which is when most of these loans get paid?

Maybe its because there is an increase of people, who, like me, took them out as a last ditch attempt to not default on anything, and have just been keeping their heads above water for many many months only to realise that this is just not sustainable.

As some of you may know I made a post on how to deal with this situation and take back control when entering into a DMP so I have great personal experience on this!

The quote below is a great example of how slick the marketing of payday loans are (Wonga and Quick Quid are the ones I see most often on TV touting this line)

Percy1983 wrote: »

EG, if I had a direct debt which would bounce and end up costing me £30 in fees plus a blemish on my credit file, paying one of these companies £15 to cover it for a few days wouldn't be a bad idea. But a situation like this should be a one off due to a valid reason, if I am just living beyond my means of course the poo will hit the fan eventually.

This is exactly one of the marketing examples payday loans use to lure people into taking them out. I absolutely agree with Percy on the above, which it may be useful for a one off situation IF you have the means to pay it back the next month.

The problem is, for many people, they do not have the means to pay it back the next month. In too many cases if you do not have enough money to cover DD's one month then the likelyhood is you're not going to have enough the next month either!

In terms of default rates I read in Credit Today (lovely bedtime reading) that payday loan defaults are in the high single figures (whatever that means 8-9%?) which is very high for the loans industry.

Having taken out loans with 4 payday loan companies I can honestly say it was the worst thing I could have done, but as said when you are desperate................

Best

SnV

bluejeans53

Hiya, I did say I did not think SB meant to offend. It was just the "what possesses people" that got to me. I am interested in this thread and will keep reading, as I need all the information I can to steer clear of them. The thought of getting another one before my next payday (10 days away) keeps popping into my head. I do NOT want to do this, I just know I could have money "today". I just keep coming on here and reading and posting to keep myself from doing it. I know all the pitfalls of going ahead and getting ones, just when I am struggling, my mind of its own accord gets to thinking of this. Fought the urge for 5 days up to now.