One of the questions that people tend to ask about payday loans is whether these loans are reported to credit bureaus. The answer to this question is a little bit complicated, as it depends on the specific lender and loan that you take out.
There are different types of credit checks, and most payday lenders conduct what is known as a soft credit check. Let’s first look at the difference between a hard credit check and a soft credit check.
What is the Difference between a Hard Credit Check and a Soft Credit Check?
When you are applying for a loan or credit card, you will likely be asked to authorize a credit check. This means that the lender will order a report from one or more of the major credit bureaus to see your credit history.
There are two types of credit checks: hard and soft. A hard credit check will leave a mark on your credit score, while a soft credit check will not. Which type of check the lender performs depends on their policies and your agreement with them.
A hard credit check is performed when a lender wants to evaluate your current creditworthiness. This usually happens when you are applying for a loan or line of credit, or when you are requesting an increase in your current limit. The lender will order a credit report from one or more of the major credit bureaus and review your credit history, including your credit score, current debt levels, and payment history.
If you are not approved for the loan or credit card, or if you are offered a lower limit than you requested, the lender will likely perform a hard credit check. This will leave a mark on your credit score, which could lower your rating and make it more difficult to get future loans or credit cards.
A soft credit check is performed when a lender wants to pre-approve you for a loan or line of credit. This happens before you apply for the loan or credit card, and the lender will not order a credit report from any of the major credit bureaus.
Instead, the lender will likely check your credit score through one of the credit monitoring services. This will not leave a mark on your credit score, and it will not affect your rating.
So which type of credit check does your lender perform? That depends on their policies and your agreement with them. If you're not sure, contact the lender and ask them about their credit check procedures.
Is a Good Credit Score Required to Get a Payday Loan?
A good credit score is not always required to get a payday loan. However, some lenders may require you to have a minimum credit score to qualify for a loan. If you have bad credit or no credit, you may want to consider a payday lender that does not perform what is known as a hard credit check. This can help you avoid being denied a loan. However, be sure to read the lender's terms and conditions carefully before applying.
There are two types of credit checks: a hard credit check and a soft credit check. A hard credit check is when a lender pulls your credit score to see if you’re eligible for a loan. A soft credit check is when you pull your own credit score, for example, to see what your credit score is.
A hard credit check can impact your credit score, whereas a soft credit check cannot. If you’re planning on taking out a payday loan, it’s important to know the difference between a hard and soft credit check – and how each could affect your credit score.
What Happens if You Don’t Repay a Payday Loan?
However, if you cannot repay the loan on time, the lender may report the missed payment to the bureau. This could damage your credit score and make it more difficult to get future loans. For this reason, it is important to carefully read the terms and conditions of any payday loan before you agree to it. If you do take out a payday loan and can't repay it in full, it's important to contact the lender as soon as possible. If you don't repay your loan, the lender may report it to credit bureaus, which could damage your credit score.
So, if you're considering a payday loan, it's important to weigh the risks and benefits carefully. Be sure to ask the lender about whether they report to credit bureaus, so you can make an informed decision.
If you do decide to take out a payday loan, be sure to budget for the full repayment amount and make every effort to repay on time. This will help protect your credit score and ensure that you don't get into debt trouble.
A payday loan is there to help you get out of financial trouble. Being a responsible borrower and only borrowing what you need to cover unexpected expenses is the key to a successful payday loan and protecting your credit score.