Payday loans have become the default option for many people in times of financial distress. The reasons for this are many. Take out payday loans, which are easy to get and can be approved by people with bad credit. Also, payday loans are very fast in the sense that you can get approved and have the money in your bank account within a few hours.
Finally, payday loans are an easy way to get instant relief when you need it. Payday loans are often marketed as a quick way to deal with a financial emergency. They are easy to apply for and are usually approved within minutes. Payday loan companies are careful about who they lend to and look for solid proof of employment.
Owen Wilcox, co-founder of US Installment Loans, said that “Most payday loan companies require that borrowers have a checking account, an active phone number, and a steady job with a paycheck. The interest rate on a payday loan can be as high as 500% or more. The borrower is expected to repay the loan on the next payday, which is a few days away.”
However, payday loans are often used to finance a vacation, a wedding or a big-screen TV. Borrowers who don’t have a financial emergency are using the payday loan to supplement their income or to pay for things which they can’t get in a traditional loan.
How to avoid the negative impact on your credit score?
Today, more and more people need a short-term loan. But, what can you do if you have no other way than to get a payday loan? First, you have to be aware of the bad consequences of payday loans.
If you have realized that you have made a mistake, you can try to do everything you can to repair your credit score. Here are a few tips to avoid a negative impact on your credit score:
- If you think that you may need a payday loan in the future, then don’t use this service. There are better services that can offer you a lower interest rate and a better loan.
- You can make your payments on time. The less payments you miss, the less your credit score will be affected.
- The more you can pay off, the better. If you have already repaid the loan, you will have a lower loan to credit ratio.
- Keep your credit card debt low. This can help you to avoid further problems with your credit score.