Payday Loans affect Credit rating report

siepod

Hi,
I took out a payday loan and successfully continued to make the payments each month as I was told this would help rebuild my credit rating. However, it now appears this has had completely the opposite effect, as I am being penalised for the length of the loan. Is there any advice on anything I can do about this?
Thanks,
Sie

gb12345

siepod wrote: »

I was told this would help rebuild my credit rating.

Unfortunately, whoever told you this hasn't got a clue what they were talking about - I hope they weren't advising you in a professional capacity.

siepod wrote: »

Is there any advice on anything I can do about this?

Don't take any more PayDay loans and don't expect to get reasonable rates of credit in the near future - lenders will see the PayDay loan on your file and assume that you are in a mess financially and treat you as a high risk borrower.

siepod

Thankfully it wasn't a professional capacity, but I think it was in terms of the angle that because I had no loans or anything on record since my credit problems, it would show I have had loans and always succesfully paid them on time. But your response makes sense. Guess I'll just have to sit it out for a while, not that I need anything at present, more just frustrating as obviously I'm trying to improve things....! Thanks again for your reply!

gb12345

What you should have been told it so take out a sub-prime credit card and put some spending on it each month and pay it off in full.

That along with taking out a cheap mobile phone contract would have helped build a credit history.

siepod

Would it be worth doing that now or would that just be adding to the problem?

Thanks for all your help by the way, really appreciate it...

gb12345

It won't do any harm and will continue to build on your credit history.

The APR you get offered will be horrendous, but as long as you make sure that you repay in full each month, that is irrelevant.

siepod

Brilliant, any particular one you would recommend or shall I just get any as they're all roughly the same?

Nice_Weather_For_Ducks

I have survived the last 20 years without a single loan or credit card, and I am bombarded with offers of "guaranteed" £10000 loans and cards every day.

Want a good credit rating, never use credit!!!

Oh and by the way it saves £1000s in interest!!

bigadaj

Nice_Weather_For_Ducks wrote: »

I have survived the last 20 years without a single loan or credit card, and I am bombarded with offers of "guaranteed" £10000 loans and cards every day.

Want a good credit rating, never use credit!!!

Oh and by the way it saves £1000s in interest!!

I've never had a loan but have several credit cards, and it's been a lot easier with them if sensibly managed. You get additional purchase protection, interst free period, cashback and are very convenient for holidays and travelling.

Nice_Weather_For_Ducks

siepod wrote: »

Hi,
I took out a payday loan and successfully continued to make the payments each month as I was told this would help rebuild my credit rating. However, it now appears this has had completely the opposite effect, as I am being penalised for the length of the loan. Is there any advice on anything I can do about this?
Thanks,
Sie

A payday loan should be repaid on your PAYDAY in one lump sum.

A loan over 6-12-24-36-48-60 months should be repaid monthly.

Maybe this is the problem?