Payday loans.... urgh

bikermom

My husband and I took out some loans with wonga in order to get our credit rating up, because we have no loans,credit/store cards and we dont buy on finance - in fact all we have is our mortgage.

I have seen some news today thats making me feel sick that mortgage companies will not lend to you if you have these. I appreciate i took these out willingly - but we didnt need the money, the amounts were miniscule between 50-100 quid a time and were always paid back early/on time as we only took them for a week at a time.

Does anyone know more about this then me as im going around endless cyberloops trying to work this out!

OneLife_OneShot

bikermom wrote: »

My husband and I took out some loans with wonga in order to get our credit rating up, because we have no loans,credit/store cards and we dont buy on finance - in fact all we have is our mortgage.!

Taking out a PDL shows financial mismanagement even if you thought it would boost your credit rating it will hamper it. You should get a phone contract or a sub prime CC that you could pay off each month.

iolanthe07

Taking PDLs screams 'desperation' to a main stream lender, and will do your credit rating no good at all.

dotdash79

How long ago was this? If it was in the last 12 months then it's had a massive impact, if it's a 18 -24 months ago then I wouldn't worry too much about it some banks would say no others will be fine.

Just out of interest how many PDL did you take?

bikermom

we have taken 3 in the last 12 months. We didnt want to get a long term loan as we didnt need the money and tbh, we probably wouldnt have got one because our credit rating was so low. I do not agree with credit cards, as in my opinion that is spending money that is not yours, same with finance - if i want something ill save and pay outright. The only exception are a mortgage as there is no easy way to save that kind of money within the time of getting somewhere to live. Stupidly we thought that showing we can pay items on time would be good for us and help us get our mortgage - it wasnt untill i stumbled on an article this morning that i realised how stupid it was. Now we have sold our house and wont be able to get a mortgage for another home....all because of payday loans - i just thought the only problem with them was irresponsible borrowing - taking out more then you can pay back etc.... will be avoiding like the plague in the future.

dotdash79

If you can go to a non credit scoring lender then you might be ok, it's worth speaking to a broker.

What kind of deposit do you have?

Credit cards you use for buying petrol for the month then you pay of the balance, you don't pay interest and it shows good money management.

however as you have already had a mortgage and can be shown to pay that on time is the best indicator to a lender you can managed your finance, you didn't need any other credit.

ChopperST

Why did you see the need to get your credit rating up if you already have a mortgage and have no need for credit?

Both your mortgage lender and your current account provider report to the CRA's so that would be sufficient for most mainstream lenders for you to obtain a credit card or loan provided both are up to date?

You took 3 pay day loans for no reason??!!

Sorry something you are not telling us here...

JimmyTheWig

bikermom wrote: »

we have taken 3 in the last 12 months.

Generally we don't know exactly how the banks view anything, but I find it easiest to think about how it looks from your point of view.
So if you didn't know much about someone other than the fact that they've had three payday loans in the last year, what would your gut reaction be about their finances?
I'm guessing that you would guess that their finances were pretty bad. Most people would, certainly, because the finances of most people who have had three payday loans in the last year _are_ pretty bad.

Now, if these people wanted to borrow a large amount of money from you, would you believe them if they said they only took these loans out to build their credit rating?
I'm guessing that you wouldn't.

Obviously we believe you on here as you've got no reason to lie to us. But I don't think the bank would take the risk.

I do not agree with credit cards, as in my opinion that is spending money that is not yours, same with finance - if i want something ill save and pay outright.

You want to buy something for £100.
You have £100 in your bank account to pay for it.
You pay for it on credit card instead and put the £100 in your bank account to one side.
When the credit card bill comes in you use the £100 that you put to one side to pay it.
This isn't spending money that isn't yours.
Furthermore, unlike the payday loans, it won't have cost you anything and will be seen as good, responsible credit by the banks.

bikermom

We did a check on experian and our credit was fair, couldnt see why as there were no defaults, no ccjs nothing - in fact it was pretty bare. we had been turned down for a loan we asked for 2 years ago to do home improvement when i was pregnant because of our lack of credit, and were advised to improve our credit rating. In the end we just dipped into our savings to pay for the improvements. We knew we wanted to move home which would mean increased borrowing so we knew we had to improve our credit - having been turned down for a loan - and the only credit cards we could have gotten were rediculous APR - we felt payday loans were the only option.

bikermom

You want to buy something for £100.
You have £100 in your bank account to pay for it.
You pay for it on credit card instead and put the £100 in your bank account to one side.
When the credit card bill comes in you use the £100 that you put to one side to pay it.

But what about the interest added to it? so the £100 i would have spent i pay back £110. so im actually losing money there arent I?

JimmyTheWig

bikermom wrote: »

the only credit cards we could have gotten were rediculous APR - we felt payday loans were the only option.

Rediculous APRs on the credit cards? 34.9%, maybe? That's pretty rediculous I agree.
What APR were the payday loans?

The thing is, with the vast majority of credit cards, as long as you pay off the statement balance in full on time every month you don't get charged _any_ interest, regardless of the APR.