Do payday loan ruin your credit history ??

Foxn86

Just wondering if anyone can help. I took 1 payday loan 1 year ago as a one off needed cash quickly as a one off. Anyway paid it right back no issues and they put it on my experian file as settled last year. However i have noticed a lot of threads on here saying that it ruins your credit history and makes banks decline you for loans etc.
Reason i ask is im going to be applying to my bank soon for a loan and would be gutted to be declined for using a payday loan once a year ago.
Any useful info from people who know this or work in bank or finance would be much appreciated,

Thanks:rotfl:

OneLife_OneShot

Yes it can be detrimental even if paid off it shows a lack of budgeting, I'm not saying you are bad at that but that is how the banks work.

DevCoder

They don't ruin it, but they aren't great. Lenders see them as desperation for cash or living beyond your means.

1 PDL taken out a year ago and repaid on time probably wont harm the scoring too much.

Foxn86

conisme wrote: »

Yes it can be detrimental even if paid off it shows a lack of budgeting, I'm not saying you are bad at that but that is how the banks work.

Thats a shame it will affect me badly really quite gutted about this. Oh well there not very much i can do, it was literally due to the fact they paid me out within 11 minutes of applying it was solely a speed thing and i have never used them again since. When do you think the bank won't hold it against me ?

pc1271

It should disappear from your file after 6 years. If it was a single occurence over a year ago and you have other more recent things like credit cards, mobile contracts, etc on your credit record which show you are managing your money well, I doubt it will have too much impact on you now.

Foxn86

pc1271 wrote: »

It should disappear from your file after 6 years. If it was a single occurence over a year ago and you have other more recent things like credit cards, mobile contracts, etc on your credit record which show you are managing your money well, I doubt it will have too much impact on you now.

Yeah i have mobile phone contract paid fine, also 2 recently settled credit cards. 1 ongoing which is just about paid off and 1 store card. So im hoping they will see it as a one off. If i knew what i know now i would never have done it

marathonic

Exactly. Payday loans weren't as widespread 5-years ago so I'd imagine that, with a lot of banks, it could have been one-strike and you're out.

However, with a larger percentage of the population using them, the criteria are bound to relax with respect to one-time usage of the facility.

Don't get me wrong, you will be blacklisted for certain products, such as 95% LTV mortgages, until the loan drops off your file.

Regarding your loan application, I'd guess that you will be approved but, perhaps, not at the advertised rate, i.e. if you were apply to Sainsburys, they might offer you 10.9% instead of the advertised 5.1%.

The reason for this is that they only need to give the advertised rate to 51% of those approved and, for a Best Buy loan, more than 51% of those approved will have perfect credit histories with no payday loans.

Foxn86

Ok well doesn't seem to be the end of the world but lesson learned the hard way ! thanks for your input