Did you know that over 61 million American consumers have a "subprime" credit score? A subprime FICO score is one that is under 640 according to the three major credit reporting agencies. Having a less than perfect (or even decent) credit score can be due to a bevy of different reasons: job loss, health issues, divorce, or the mismanagement of finances. For many people it's the last of those and is a direct result of over borrowing and overextending one's budget.
Direct payday loan lenders understand that for whatever reason a person has subprime credit, we all make mistakes. They also know that bad credit comes with a price which can mean paying higher interest rates on credit cards, mortgages and car loans, as well as being turned down for credit and even the loss of employment opportunities. That is why they do not look at a person's credit score when applying for a payday advance loan. Taking out a short-term loan for a cash emergency is fine and will not affect your credit but you still need to consider how you are going to rebuild your credit score and get out of the sub-prime category to afford yourself more financial borrowing opportunities in the future.
The first step is knowing where you stand in regards to your FICO score. You can do this by ordering a copy of your credit score from the three major credit bureaus: Transunion, Experian, and Equifax. Each American consumer has the right to one free copy of their report every year. You can request your report either online or calling directly. Unfortunately, you will have to pay to get your FICO score with your report but it's worth it because it is what defines your credit worthiness. The three reports may vary depending on the bureau and will change over time as your credit history changes. Once you receive all three, go over them individually to check what has been reported and to make sure everything is accurate. Mistakes on your reports can be cost and affect the future of your credit so it's vital you check to make sure everything it correct. If you find something that you feel is not accurate, it is important that you immediately dispute it with that particular bureau. With your report should come a form that allows you to do so.
Assuming your credit score needs some help, it's important that you take action to rebuild your score and correct any mistakes that are on your report. It's not going to happen overnight, in fact it could take months or years, but be patient and remember that you are working to secure your future credit worthiness. While paying off your payday loan will not cause your score to go up, it will prevent you from paying extra in interest and fees as well as free you up to start paying off any other high interest loans or credit cards. Once you start doing this, your credit score will get a boost. Keep in mind that although payday lenders do not run your credit and do not report it when you are repaying, your loan should go into default, a third-party collector may take over your account which means there is a chance they will report it to the credit bureaus. Call your lender right away if you are not able to make your payment.
In the meantime, continue to check your credit report (s) to be sure your efforts are reflected in your score. If you see something that is not accurate, be sure to report it. Not only do you want to pay attention to mistakes regarding debt that you have incurred, but also want to make sure there you are not a victim of identity theft or fraud.