There is talk around the finance industry that an urban myth is emerging – namely that Payday Loans help rebuild your credit profile.
Don’t believe it
The opposite is in fact true. Most lenders view payday loans as a sign of a problem – you have got to be pretty desperate to borrow money at over 1,000% interest right?
The majority of mortgage and secured loan lenders won’t accept applications from people with payday loans – it’s as simple as that.
Now if you have taken out just one payday loan, and have a very good reason for doing so, your chances improve. But habitual users of payday loans will find their choice of lenders reduced and consequently less competitive interest rates.
If you are thinking of taking a payday loan, look at the alternatives first. Loans are available to home owners up to 100% of the value of their property and will accept some historical credit issues – talk to an adviser at Promise
If you already have payday loans try to wean yourself off them so that they disappear from your credit file – this might take a few years though.
Also consider a term loan to pay off the payday loans in one go. It might not be the cheapest rate available but it will be far lower than payday rates and could help you regain control of your cash flow.
A remortgage or a secured loan might give you the solution but speak to an adviser – they are required by regulation to recommend solutions which are in your best interests. Going it alone could make the matter worse.