Will PDL affect credit negatively?

LemonSocks

Our cat needed an emergency vet appointment so whilst I was at work my idiot boyfriend booked him in and decided to take out £150 with Wonga (before even knowing how much the vet visit would cost!).

I phoned on my break when I found out. I was furious and told him to pay it back immediately (especially considering he'd set to pay it back after my pay day and not his).

He paid it back straight away so we've not had to pay any interest. However now I'm worried that it might impact his credit rating as I understand even paid back PDLs aren't pleasing to future credit lenders. Will it have any affect?



(Incase you're wondering I had enough for the vet costs in my account, which my boyfriend would have known if he had discussed it with me first - now we're just waiting for the insurance to pay out).

kloana

Payday loans are normally recorded against your credit file, and the type of loan (i.e. PDL) you've taken is also recorded.

On the plus side, settling this loan in full can gain your boyfriend a 'green tick', demonstrating that he's took on a financial obligation, and stuck to his repayment responsibilities.

On the negative side, some non-PDL lenders have become wary of PDL users, and have decided to restrict or even refuse certain types of lending to borrowers who have also used PDLs. Mortgages in particular are affected, with one lender (GE Money) stating that they'll refuse frequent PDL users (one loan during last 3 months, or 2+ loans in the past year). Anecdotal evidence also indicates that some other lenders may be taking the same line on PDLs.

Any negative effect should be short-ish term. If he can stay clear of PDLs now and forevermore, he should be OK. If you don't have any plans to apply for credit over the next year or so, this matter should not cause you any real problems in the future.

Hazzinho

One PDL won't impact you long term, it's people living off them that are seen as negative. Short term it may affect him, PDL are a sign money is tight so immediately concerns lenders when you apply for a loan or credit card. Sounds like you've put him straight Might be worth seeing if they'll even be recording it if he immediately returned the money.

michu

Oh, crap. I believed I've been building my credit with them. I'm a person that moved to UK about 18 months ago and obviously no bank wanted to give me any credit, even though I earn in the top 1% percentile. Got about 15 of them from different companies (even though I didn't need to), always paying in full ahead of time, growing the offered credit from offers around 150 up to 1500. All green and settled on my credit report, all paid off well ahead of time to skip crazy interest.

I want to buy a new car within next 6 months and start looking for a mortgage in about 2 years. The above was supposed to help me come up as responsible borrower. Did I just destroy my credit rating badly? What would be the best way to fix it up?

DCFC79

michu wrote: »

Oh, crap. I believed I've been building my credit with them. I'm a person that moved to UK about 18 months ago and obviously no bank wanted to give me any credit, even though I earn in the top 1% percentile. Got about 15 of them from different companies (even though I didn't need to), always paying in full ahead of time, growing the offered credit from offers around 150 up to 1500. All green and settled on my credit report, all paid off well ahead of time to skip crazy interest.

I want to buy a new car within next 6 months and start looking for a mortgage in about 2 years. The above was supposed to help me come up as responsible borrower. Did I just destroy my credit rating badly? What would be the best way to fix it up?

Only way to see what its like is to get your credit report from the 3 agencies eg noodle, credit expert and the other 1 which is experian I believe.

To lenders PDL's make the borrower look desperate, cant manage money etc. A way to fix it would be to pay off the loans asap and leave anice clean gap before you either apply for a mortgage or get a cc and use it but pay it off when agreed. Are you on the ER (electoral roll) ? A mbile phone contract might help but not sure on that, im guessing it would as its paying a fee every month.

Make you sign up for the £2 report from experian

john1002

just to help DCFC the 3 credit agencies are Experian (Credit expert is there paid service for credit scores etc, dont pay for this or any of the others that provide this type of service, go for the statuary £2 ones) Equifax and call credit(noddle is there free for life service for credit reports.)

john

kloana

michu wrote: »

Oh, crap. I believed I've been building my credit with them. I'm a person that moved to UK about 18 months ago and obviously no bank wanted to give me any credit, even though I earn in the top 1% percentile. Got about 15 of them from different companies (even though I didn't need to), always paying in full ahead of time, growing the offered credit from offers around 150 up to 1500. All green and settled on my credit report, all paid off well ahead of time to skip crazy interest.

I want to buy a new car within next 6 months and start looking for a mortgage in about 2 years. The above was supposed to help me come up as responsible borrower. Did I just destroy my credit rating badly? What would be the best way to fix it up?

Unfortunately, one of their marketing techniques is to advertise themselves as credit-builders. They'll only successfully build your credit if your credit aspirations are low. But they can kibosh mortgages and other bigger loans.

Are you an EU national, michu, or do you otherwise have the right to stay in the UK permanently/long-term? If so, approach your own bank for further credit. 18 months here, and from the sound of it, many years yet to come, may enable you to build mainstream credit now.

Don't worry too much, if you're a top earner, and you have paid the loans. If you meet any stumbling blocks during a mortgage application, a good adviser/broker should help you put your case forward.

LemonSocks

We won't be looking for a mortgage for around 2/3 years so that's a relief. I'll get him to get his credit report and I think he's now realised to not make such an important finance decision without talking to me about it first. Thanks for your help!

DCFC79

john1002 wrote: »

just to help DCFC the 3 credit agencies are Experian (Credit expert is there paid service for credit scores etc, dont pay for this or any of the others that provide this type of service, go for the statuary £2 ones) Equifax and call credit(noddle is there free for life service for credit reports.)

john

Thanks, id missed out a few bits.

michu

kloana wrote: »

Unfortunately, one of their marketing techniques is to advertise themselves as credit-builders. They'll only successfully build your credit if your credit aspirations are low. But they can kibosh mortgages and other bigger loans.

Are you an EU national, michu, or do you otherwise have the right to stay in the UK permanently/long-term? If so, approach your own bank for further credit. 18 months here, and from the sound of it, many years yet to come, may enable you to build mainstream credit now.

Don't worry too much, if you're a top earner, and you have paid the loans. If you meet any stumbling blocks during a mortgage application, a good adviser/broker should help you put your case forward.

Thanks, some good advice here. Yeah, I've paid off all the loans (long before due date). I've also had credit cards from Vanquis (cleared and closed about half a year ago), Aqua and Capital One (both almost always used and paid in full at the end of the month, and currently cleared and closed), and since recently a proper one from HSBC (hence I closed all the trashy ones). Ah, and I have an open catalog account in Next, used but - again - always paid in full, three phone contracts with Three and I'm on electoral roll since the day one. I guess the next step would be to wait until all this reflects in my credit file so it's nice and fresh, wait 2-3 months since the last payday loans and try to get some proper credit, buy the car I want, and then again pay it off to show I'm good with finances?

BTW, this whole system is a bit stupid. I know I'm a good borrower, I could afford a mortgage today - and it all seems a bit like a game whose rules are quite vague and one has to be very careful to win. I guess that being 35 and suddenly building my whole credibility from scratch puts me in a bit different situation than people who lived here the whole life - but still, it's like game. I'm earning points, gaining trust with small steps, all of which would be unnecessary if any lender just wanted to have a honest look and make an individual assessment.

Replying to your question - yeah, I'm UE citizen and I'm here to stay. Don't worry though, I'm not in for the benefits even though I'm from Poland ;-)

Sorry for hijacking the thread like this.

smithers1981

michu wrote: »

Oh, crap. I believed I've been building my credit with them. I'm a person that moved to UK about 18 months ago and obviously no bank wanted to give me any credit, even though I earn in the top 1% percentile. Got about 15 of them from different companies (even though I didn't need to), always paying in full ahead of time, growing the offered credit from offers around 150 up to 1500. All green and settled on my credit report, all paid off well ahead of time to skip crazy interest.

I want to buy a new car within next 6 months and start looking for a mortgage in about 2 years. The above was supposed to help me come up as responsible borrower. Did I just destroy my credit rating badly? What would be the best way to fix it up?

if you earn in top 1% percentile surely you can afford to buy car and house outright why are you wasting time taking out 15 PDL's think i can smell bulls,,t!