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How to Improve Your Credit Score with Payday Loans

How to Improve Your Credit Score with Payday Loans

Payday loans are some of the quickest ways to gain access to cash, faster than personal loans, credit cards, and other similar alternatives.

It takes 10 minutes to complete an application and maybe just a few hours to get the money. How convenient is that?

Despite their convenience, payday loans online are not for everyone. However, there are a few situations when they’re probably your best choice.

An unexpected expense, an emergency, urgent repairs… When an expense can’t wait, this is your way to go. But easy access is not the only major advantage of payday loans, so why else would you rely on them?

Very few requirements

Low requirements are one of the reasons wherefore payday loans are so easy to access, a serious reason to choose them for unexpected expenses.

Pretty much any other type of loan will come with more requirements. To get approved for a payday loan, you’ll have to be over 18, a resident, and employed. That’s pretty much it. Obviously, you’ll have to upload some documents to prove your identity and employment status, but these are the main things.

There are no requirements regarding your income either. People with a low income will also be approved, yet they’ll obviously get less money.

No credit score consideration

Payday loans require a guarantee, and that’s your income. Prove your employment status, and that’s a pretty safe bet for lenders. They won’t be bothered about your credit score, which is essential for a lot of people who can’t access funds in other ways because of their poor score.

Showing that you have a job for a while means you’re responsible. Obviously, lenders will calculate your affordability based on your income and expenses, but the credit score won’t be considered.

No collateral required

There are other types of loans that can provide relatively quick access to cash, such as title loans. But those loans are secured. A car title loan, for example, means you’ll pass your car title to the lender until you repay. You can use the car, but it will be repossessed if you fail to pay on time.

On the other hand, payday loans are unsecured.

There’s no collateral whatsoever, no security. If you fail to pay, the lender can’t take anything from you. However, this doesn’t mean you can overlook this debt. No, an unsecured loan can also put you in even more financial difficulty later on.

Your credit score will go even lower, and other lenders may take such issues into consideration.

When to get a payday loan

Payday loans are very accessible, but then again, they’re not for everyone else. Here comes the big question, then, when should you go for a payday loan? There are situations when other types of loans might be more appropriate, whether because of lower rates or better deals.

Payday loans will bring in less money than a personal loan, while personal loans will also come with lower rates.

But payday loans are processed within hours or even minutes. Complete the application in the morning, and the money might be in your account within a couple of hours.

A personal loan will require a visit to the bank or perhaps a post application. It will take days to get accepted, and requirements are much higher. You’ll need to prepare for longer and maybe work on your credit score too.

With these ideas in mind, payday loans are obviously the best option for urgent situations, and here are a few examples:

  • Car repairs
  • Medical bills
  • Groceries
  • Rent or mortgage
  • Utilities

Basically, if you’re out of money for something urgent, you don’t want to wait until your paycheck kicks in. Besides, sometimes, it’s cheaper to get a payday loan than face the fees and taxes associated with late payments for other things, like utilities.

While not necessarily recommended, you might as well get a payday loan for a shopping spree, your birthday, a holiday on a special offer, or perhaps a new pair of shoes.

Payday loans are aimed at those in urgent need, but if you’re responsible, you might as well use them for everyday expenses and, well, things you don’t really need.

Payday loans can and will bring convenience to your life. They’re not perfect, and they’re usually more expensive than other types of loans.

But then, they’re super easy to access, convenient, and suitable for all kinds of urgent expenses. Moreover, make sure you’ll pay your loan on time, and interest rates and fees won’t add up, giving you a chance to keep the deal at a good rate.

There are no credit score requirements and no collateral involved. Instead, you’ll need a source of income, such as a job. In other words, requirements are just as low and basic.

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