Payday loan or loan?

garethw08

Hi, wondering if someone can help. I am looking to get a mortgage in 18 months time. I've been told by a broker that lenders do not like pay day loans.

A couple of month ago I took a 'loan' out with a payday loan company but paid it back over a few months. On my credit report it went down as a loan and not a payday loan and my score went up. Whereas previous when I had taken a smaller amount with the same company and paid it back on my pay day it went down on my credit report as a payday loan.

Sorry if that seems very confusing.

My questions is, will lender still count this as a negative if it goes down as a fully paid loan rather than a payday loan?

longtermplanner

There are no rules here. Lenders can make decisions on whatever basis they want.

If there is 18 months to go until you apply for a mortgage, you need a squeaky clean credit record in this time. Don't borrow any more from anybody! And start repaying your existing debts, preferably down to zero.

somethingcorporate

Motherofdragons wrote: »

I don't think it matters about previous loans - if you paid it back on time without falling into arrears then it looks good - hence your credit score going up. Agree with above though, don't borrow any more just in case.

The credit "score" is totally meaningless, it means nothing to anyone but the agency raking in people's hard-earned to generate it.

Payday loans on your credit file and in your bank account will almost certainly raise flags with potential lenders due to the nature of the lending (high risk) and the type of people that need to rely on these loans (generally ones that do not manage money well).

It may or may not have an impact, your best bet is to talk to a broker before applying for a mortgage, you may find some of the more pickier lenders will have issue with your past financial conduct (even if it has been paid back on time).

CLAPTON

how are you able to accrue a deposit for the property if you need to get payday loans?

DCFC79

No 1 on here can give a definitive answer as we dont know how the mortgage companies view pay day loans, some might run a mile and others may not.

I will say dont go near them again, with a mortgage you will have to budget accordinley so can you do that ? Maybe try budgeting as if you have a mortgage, pay day loans wont be a good idea if you were to have a mortgage.

garethw08

CLAPTON wrote: »

how are you able to accrue a deposit for the property if you need to get payday loans?

Who said anything about needing to get a payday loan? I don't need one. I was just asking if there was any difference from a 'payday loan' and a 'loan' from the same company.

Saving for a deposit in 18 months is no problem. We have already set up a budget and will have a 25k deposit when the time comes to apply.

Thank you all for your replies. I will NOT be using a payday loans company again. Used one a few times last year because I was still in my apprenticeship and had to get a new head gasket for the car for work so was stuck. As you all know apprentices get paid peanuts (hence me being a rate breed in my trade).

I have now qualified and am on very good money compared to what I was so need to now get myself sorted to look as appealing as I can to lenders in the 18 moth period.

Thanks again