Payday loans effect your credit scores for the good

When it comes to credit checks, and credit history, most people get the jitters, since most of us have at some point or the other faltered with some of our payments, which are invariably reflected in our credit reports. Everything related to our credit history, from the day we have first opened, and operated our bank account, is recorded. This history includes any loans, overdrafts, credit cards, mortgages, utility bills, phone bills, medical bills, insurance history, and the like.

Any time you miss a payment, it is recorded in your credit history, and any future lender can access this information when they perform credit checks on your information. Lenders use this information to compile a credit file on you. This information helps them know how responsible you are as a borrower, and whether they might be getting into trouble by lending you money since it will be termed as irresponsible lending on their side. If you have never applied to any lender, or used any kind or financial service, it provides no information on you, and thus you might have problems borrowing as a first time customer, although you might have a clean record. The worst thing on your credit report would be multiple footprints of several lenders, which happens when you apply and re-apply to several lenders in order to get some money, and though all of them perform verification checks on you, they do not lend you any money, but leave a footprint on your credit profile that can be tracked by any other future visitor. These footprints show that you have been in debt for quite some time and are looking to borrow money from any source available. Lenders also check your identity, and being registered on a electoral role helps in this matter.

It is easy to apply for payday loans, and they can definitely be useful when it comes to a sudden cash crunch. Short term loans can be best used under these circumstances, because they have been designed for this purpose only. But, you should also take care, and not ruin your credit records, in order to get some cash. Payday lenders do not have stringent eligibility and verification criteria, and so if you have applied for a payday loan, then wait till you get a decision from them, before hurrying into applying for another one. You should also remember that not only is it wise to repay a short term loan as soon as possible, but it also adds to your credit rating if you have repaid the loan back in time.