Paying back loan on same day

finally3

I've been told i need to rebuild my credit back up after completing an IVA. I hadn't missed a payment during my IVA and all of it was paid back.

I have been given the option to take out a very small loan and pay it back in my own time to help build my rating back up. Now, I have been approved for a small loan up to £1500 but obviously the APR rate is crazy.

How would it affect my rating if i took out a loan for say, £200 and paid it back within one month? Would it help creditors see I can repay a loan or would it in fact, damage it for paying off too early?

Thank in advance

jonjamie1970

I think its more about the ability to repeatedly pay an agreed amount each month, therefore a loan of say a year would be more beneficial than an immediate repayment. If anything that could show an inconsistent and strange set of stats. You have to way up if the years interest is worth a minimal improvement in a credit score.

KingElvis

Also, if it's a payday loan, they're listed on your credit report as a "wage advance" which does more damage than it does good.

finally3

Hmmm. Thanks for the advice.

I think I shall just wait 12 months for the IVA to completely drop off rather than dicing around with 'money losing' loans.

FireWyrm

If you repeatedly take out loans and then pay them back in a short term, it might begin to light signal flares over the 'money laundering' camp. It's simply not normal and although it is in your case, entirely innocent, you might end up having to explain yourself to all sorts of people you didnt even know existed.

I agree with the others. Take out a credit card, make some purchases within the 3 month 'interest free' period and pay the balance exactly on time at the end of each month...careful not to get yourself into trouble with it...it takes a bit of discipline.

Take out a longish term loan, or perhaps a catalogue and pay exactly on time. Never miss a payment and make sure you dont get into trouble. The best way to repair your credit is to be a 'good boy' which is doing normal things properly. Normal people open a catalogue and pay on demand. Normal people take out reasonably small loans and pay them back etc...Dont do anything flashy and have a little patience. Slowly and surely your credit will improve and you can get slightly more ambitious.