Payday loans damage your score

Jmac88

Ok, so here’s the deal. A few years ago after I split up from my ex and he CLEARED our joint account so I turned to payday loans and got stuck in the cycle. I always paid them on time and after a few months kicked it altogether. My credit score over the years was good. Fast forward to 2018, my husband and I apply for a joint mortgage and it gets bumped, not because of the score but because I had EVER had a payday loan.
My husband had the mortgage in his sole name as a result.
Due to the mortgage check my score is now less than 100.
Has anyone out there had this situation, and what, if anything can I do about it? We would like to try again for a joint mortgage in a couple of years but I’ve heard some lenders will simply not look your way regardless of how long ago it was

pcman1985

Your score is irrelevant.

Payday loans, even if paid off on time and in full will have a negative impact on your credit file your score may go down but it is meaningless.

Give it a few years and they will have less of an effect. After 6 years they will be removed all together.

NoTB

Never had a payday loan (hopefully never will....) and somebody who has recently went through a (successful) mortgage application in the last year I was told that most lenders will categorically not even give you a second look if you've had so much as one payday loan even if paid in full and on time.

However as pcman has said give it a few months to a year and try again

MEM62

Payday loans indicate to a lender that you struggle to manage money properly and represent a greater risk. If you have a history of using payday loans, particularly if it is on regular basis, you would be well advised to use a mortgage broker. A broker will be able to steer you towards lenders that may consider individuals with a history of payday loans.

In respect of your credit 'score', this is a randomly generated number and can be ignored. It is the data on your file that is important.

dealer_wins

Payday loans signal to a lender that you have no emergency fund, and cannot cope with any unforeseen expense.

Getting a mortgage and home ownership will often require unforeseen expenses, repairs, maintenance etc so you can see why a payday loan is a big red flag.

Its actually perfectly sensible when you look at it from the lenders perspective, home ownership is much more than being able to afford the mortgage payments on paper, believe me a lot of unexpected bills crop up, and often!!

Samsung_Note2

Oddly enough ive found them a positive...after the bankruptcy i couldn't get Fresh air on credit let alone Money..lol

Used Wonga for quite a few loans,didn't really need to but free up cash when needed (was buying and selling) and after a few loans i was accepted for a sub prime credit card.

Used that and kept the account in good order and things improved...just remortgaged with Halifax and pay day loans still show on credit file,few years old now but wasn't picked up at any stage.

Should add for clarity..applied prior to Wonga pay day loans for Credit cards and straight away declined.

binaryuniverse

Samsung_Note2 wrote: »

Oddly enough ive found them a positive...after the bankruptcy i couldn't get Fresh air on credit let alone Money..lol

As with a lot of these things, it depends on how companies see you, your risk factor and what money they can make out of you.

If you can't even get a sub-prime card then, yes, a payday loan will give you some form of credit history. If you have a history of paying them back in full, a sub-prime lender will look at you and think 'yup, we can make a bit of money on this profile' and deem you worth the risk.

If you're used to getting 0% cards, as and when you want, then taking out a pay day loan will see those interest free providers getting a bit jittery, and wonder why it is you're desperate for some quick money. After all, why would you be getting one if you had spare cash available? That makes them wonder about the debts you're likely to run up with a balance transfer or purchases card. Will you actually be able to pay them off, and such.

As for the OP. You will simply have to wait until 6 years have passed and these loans have dropped off your record. You may get some lenders who may look a bit kinder of older pay day loans, that are still on your report, but you need to work on improving your history so that you have a bit more for lenders to look at. If you don't have a credit card already, then try applying for a sub prime card. Use this for a single purchase, each month, and pay the balance off every month. There is no quick fix to a poor credit history; it takes patience and discipline. But there are steps you can take to start to improve it today.

Samsung_Note2

Jmac88 wrote: »

Ok, so here’s the deal. A few years ago after I split up from my ex and he CLEARED our joint account so I turned to payday loans and got stuck in the cycle. I always paid them on time and after a few months kicked it altogether. My credit score over the years was good. Fast forward to 2018, my husband and I apply for a joint mortgage and it gets bumped, not because of the score but because I had EVER had a payday loan.
My husband had the mortgage in his sole name as a result.
Due to the mortgage check my score is now less than 100.
Has anyone out there had this situation, and what, if anything can I do about it? We would like to try again for a joint mortgage in a couple of years but I’ve heard some lenders will simply not look your way regardless of how long ago it was

Re-reading your post...how long ago was these pay days loans...sounds like several years back and only for a few months.

If that the case then id say they wouldn't damage your credit file that much..note file/history not your score.

You must have other factors that have impacted your score...worth checking all three CRA and going through them.

Also who did you apply for the mortgage as they sound rather strict...i know my credit file isnt great but Halifax took us on at 1.96% fixed for 5yrs which id say is pretty damn good given my poor history.

Jmac88

It was 4 years ago, so would still be on my file. Previous to that I’d had finance for 3 cars from Renault, a credit card which I rarely used...
we used a broker and he told us it was specifically that. He also said that some lenders will never take you on post payday regardless of if it was over the 6 years or not

forgotmyname

Paying your bills on time appears to drop your score also.

Or is it buying something fairly expensive and paying it in full when the bill comes that lowers your score?

Ben8282

Jmac88 wrote: »

. He also said that some lenders will never take you on post payday regardless of if it was over the 6 years or not

How would lenders know as the records will no longer be shown on your credit files? This is false information.
Also with regard to the drop in your credit score to 100, a single hard search on your credit files would not have had this effect. There must be something else causing this.