PayDay Loans - I used one responsibly, and didn't get stung!!!

drjones

Wutang wrote: »

is this right - take out a pay day loan, then pay it back and it ruins your credit file? wow

Look at it from a lenders point of view - would you want to lend your money to someone who regularly relies on PDLs, and all that that implies?

backinbusiness

drjones wrote: »

Look at it from a lenders point of view - would you want to lend your money to someone who regularly relies on PDLs, and all that that implies?

Indeed - like it or not it implies financial mismanagement to the extent that mainstream lenders would not lend, hence the use of pdl.

buttscratcher

backinbusiness wrote: »

Indeed - like it or not it implies financial mismanagement to the extent that mainstream lenders would not lend, hence the use of pdl.

Ive read that a lot on here and have never used them because of it. However I do like the idea of paying a couple of quid to borrow money for a few days rather than having an OD which I would most likely end up using monthly lol.

However, i did see that Wonga claim quite the opposite, saying that using them can improve your rating!

https://www.wonga.com/blog/2008/08/06/wonga-can-help-improve-your-credit-rating/

Can they just lie like that :huh:

SnowTiger

buttscratcher wrote: »

However, i did see that Wonga claim quite the opposite, saying that using them can improve your rating!

https://www.wonga.com/blog/2008/08/06/wonga-can-help-improve-your-credit-rating/

Can they just lie like that :huh:

"Using Wonga.com can actually help improve your credit rating"

Is it a lie?

Let us know how your complaint goes.

buttscratcher

SnowTiger wrote: »

"Using Wonga.com can actually help improve your credit rating"

Is it a lie?

Let us know how your complaint goes.

that was exactly my point! Sorry for not being clear enough

john1002

I think it is wrong to say that these types of loans will damage your credit rating, I have yet to see anybody in the industry state this is the case, and to be honest if they did that would be for only one company out of the thousands that lend.

Having a high to debt ratio could be given as been bad for your rating, as we know credit scoring is an art known to the very few that will never see the general consumer knowing what is good or bad for a rating.

I look that they report to the CRA with nice green ticks and show settled, all good in my view.

Handled well they are like any form of credit avaidable.

John

esuhl

buttscratcher wrote: »

However, i did see that Wonga claim quite the opposite, saying that using them can improve your rating!

https://www.wonga.com/blog/2008/08/06/wonga-can-help-improve-your-credit-rating/

Can they just lie like that :huh:

I imagine that (particularly in the current economic "climate") that someone with absolutely no credit history would find it hard to get a loan -- probably more so if they were self employed or had a low income.

Perhaps a lender would prefer to lend to someone who had paid back 10 pay-day loans on time rather than to someone with no history who might be the sort of person to default.

Everyone else would probably find that it worsens their chances of obtaining credit as it indicates poor money management.

On the other hand, poor money management can be quite profitable for loan companies who might be rubbing their hands in excitement at the thought of a reliable person paying back large interest charges when they could just manage their finances better...

Who knows...

Derivative

All of this talk about credit ratings and such strikes me as rather odd.

I have a credit card that I pay off in full - it's only there to improve my chances of eventually getting a mortgage, and I'm not sure that would rank very high on the list of priorities for a lender, wouldn't they be looking at income, affordability, security of job, etc?

That's pretty much the only loan that is necessary for most people, and only because mortgage interest is generally lower than rent.

Why would you specifically want a 'good credit rating'? Once you're "out of the hole" and you get some emergency savings, you should be sorted barring long periods of unemployment.

esuhl

EdgEy wrote: »

...wouldn't {lenders} be looking at income, affordability, security of job, etc?

Of course -- if you have £10M in savings and income of £600k/yr then a payday loan is hardly going to affect your credit rating. But if you're on a low income with no savings, a mortage lender might consider your usage of payday loans to indicate poor money management or your lack of other solvent funds and therefore more risk. A loan company might see that as as profitable and less risky. (I don't know - just a logical guess).

EdgEy wrote: »

That's pretty much the only loan that is necessary for most people, and only because mortgage interest is generally lower than rent.

I'd argue that a credit card is also "necessary". It can act as a "buffer" -- it's better to have a short-term credit card debt than an unauthorised overdraft or a payday loan. It's usually cheaper to spend abroad on a credit card than a debit card. As you said, it may also give someone a better credit rating which can be useful to get a mortgage. And you get better protection when buying goods over a certain value.

I_luv_cats

I think the problem is that many people are already up to their eyes in money troubles and a payday loan just adds to their woes.

Rolling over a Pay day loan and missed payment fees etc. that make them a disaster.

They may be just the ticket for a temporary fix until your payday.