Payday loan bad credit is a cash advance provided by a lending company and is usually paid back when you receive your paycheck.
It is known as a bad credit loan because borrower’s credit score is not considered while applying for this loan.
Most payday lenders don’t check a borrower’s credit history or credit score with the big three credit bureaus — TransUnion, Equifax and Experian — to decide who gets a loan. Nor do they report on-time payments to the bureaus so that your credit scores improve.
However, if a borrower fails to pay the loan, the credit bureaus will likely hear about it and the credit score will be damaged. While the payday lender might not report a defaulted loan to the credit bureaus, the collections agency may report the default to the credit bureaus immediately.
What is bad credit and bad credit loan?
Bad credit usually describes and individual’s problem with credit. However, bad credit is an ambiguous description because credit rating is a number, not a descriptor like “good” or “bad.”
Bad credit loan describes a loan meant for individuals with low credit scores. Technically there is no such thing as a bad credit loan and this term is coined to reflect loans for individuals with low credit score.
Loans for individuals with less-than-perfect credit score will often be for smaller amounts, shorter duration and at higher interest – similar to payday loan bad credit.
However, each loan application is unique, and a person’s credit rating is not the last word when it comes to a person’s ability to repay a loan.
How to improve bad credit:
Your credit rating is your economic trust level. In order to get a better deal than payday loan bad credit, you need to improve your trust level and work on improving your credit score.
In order to improve your credit score, take a loan only in emergency and pay your bills, loan installments and other dues on time
Some reasons to avoid Payday loan bad credit:
- High APRs (Annual Percentage Rate)
- Bad-credit loans are generally limited to $1,000 or less.
- Beware of renewing your loan and getting trapped in a cycle of debt.
While payday loan is an option for borrowers, with low credit score, it is not always an appropriate solution to a money problem. In many cases, payday loan can spiral and you can get trapped in a cycle of debt that it is hard to get out of. Always think it through and do your due diligence while selecting a payday loan lender.
In case you are ready to take a payday loan bad credit, direct lenders can help you with a bad credit loan. Click here to learn more about payday loan direct lenders.
Click here to learn about payday loan requirements.