Will a Payday Loan Affect My Credit Score?

Woman thinking about payday loans and credit

Those who are unfamiliar with payday loans and how they work often have plenty of questions to ask.

Understandably, one of the most common questions is “do payday loans affect your credit score?” Generally speaking, the answer to that is no, they don’t; however, it is possible for payday loans to negatively impact your score if left unpaid.

Key Takeaways:

  • Do payday loans affect your credit? No, they don’t
  • Does applying for a payday loan affect credit? No, it doesn’t 
  • Do payday loans check credit? At Net Pay Advance, we never do a hard credit check

Do payday loans check credit?

Here at Net Pay Advance (and at most other lenders, too), we never do a hard credit check. It makes no difference to us whether your credit score is good or bad – we’re just here to provide financial relief to those who need it. 

We’re just here to provide financial relief to those who need it. (That’s why we’ve added instant payment options.) People with bad credit still deserve financial assistance.

People with bad credit still deserve financial assistance. We’re not here to judge. We’re just here to help

This is one of the benefits for the consumer that is applying for a short-term loan. Why is this? Well, to be honest, most consumers that are applying for a payday loan are doing so because they are unable to obtain financial aid by means of a credit card or some other sort of loan. 

In lieu of pulling credit history and evaluating, lenders review other information to underwrite applicants. This information can be proof of income, reviewing applicant’s bank history, and/or consumer reports.

Does applying for a payday loan affect credit? The answer is no. Repayment does not impact your credit score either.

How payday loans impact your credit score

Some individuals seek out loans based on a desire to raise their credit score. While certain types of loans can improve your credit score, like credit cards, paying back or making payments on a payday loan will have no effect on your credit score.

Text chat between new customer and Maria with Net Pay Advance. New customer asks if Net Pay Advance impacts credit. Maria reassures them we do a soft credit check which does not impact credit score.

 According to the Consumer Financial Protection Bureau, payday loans typically aren’t reported to any of the three major credit reporting companies, meaning there’s not even a chance for payday loans to positively impact your credit score.

Although we don’t need your credit score to approve you for a loan, if you fail to pay back your loan, your balance may be turned over to a third-party collections agency. That’s when there may be an impact.

Missed payments can affect your credit score

In the hands of a payday lender, failure to pay back a payday loan still won’t harm your credit. 

Payday lenders will usually attempt to contact you multiple times to collect payment before handing your debt over to a third-party collector. If the debt collector then reports the debt to one of the national credit reporting agencies, that’s when your payday loan debt could begin to weigh down your score.

This is one reason that Net Pay Advance pushes so hard to collect late payments. Paying off your payday loan in a timely manner will prevent your loan from going to collections and leading to a mark on your credit report. It’s just as much for your benefit as it is ours. (Plus, once you’ve paid off your loan, you’re immediately eligible to reapply!)

If you have any questions about how payday loans work through Net Pay Advance, don’t hesitate to reach out. You can call at 888-942-3320, use the chat feature on our website, or email us at [email protected] during our business hours to speak with a representative.

And, of course, remember to pay back your loan on time! Does applying for a payday loan affect credit? No, it doesn’t as long as you play it safe and make your payments!

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Net Pay Advance is a licensed loan provider, locally owned and operated in Wichita, Kansas. Our No. 1 priority is helping you, the customer, by providing access to the cash you need and helping support financial independence goals with valuable, informational, and entertaining content. Stay up-to-date on our posts by following the Net Pay Advance Facebook, Instagram, and Twitter pages. Our organization is committed to transparency; learn more about our authors and editorial policy. The information provided within this blog is for educational purposes only and should not be construed as financial or legal advice. Please contact us if you have any questions.

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