Do Payday Loans Affect My Credit Score?
You know a payday loan has a positive impact your wallet. But can a payday loan affect your credit score also?
Credit cards, utilities, phone service, and more. For years, you’ve worked hard to pay your bills on time and build your credit. Then life happens, and payday is still a long way off. You need a bit of quick cash, but you don’t want to do long-term damage to your credit score. What do you do?
If this sounds like you, take a deep breath. Then keep reading to find the answer you seek.
Soft and Hard Credit Checks
Missing payments isn’t the only thing that impacts your credit score. Credit checks do as well. At least some of them do. Because while you may not know it, all credit checks are not created equal.
When you go to the bank for a loan, they’re obliged to run a hard credit check on you. During this check, the lender looks for red flags. They want to see that you’ve used credit wisely in the past, don’t have excessive debt, and are likely to make good on your loan.
Most of the time, these lenders make a note that they ran a credit check on you. This way, if you run from bank to bank getting loans, other bank lenders will know it. Try getting loans at too many places in a short amount of time, and lenders will get suspicious and may stop lending to you.
Soft credit checks, on the other hand, don’t leave a mark on your credit. These are typically used by small-dollar lenders. The purpose is the same as a hard check (to ensure you’re able to pay back the loan). However, unlike hard checks, payday loan lenders use a soft check only to look at your credit history. They don’t note that they checked your credit.
Want to check your own credit? This is also a form of soft credit checks, which won’t leave a mark on your credit.
Do Credit Checks Impact My Credit Score?
Soft credit checks, such as those used when applying for a payday loan, do not impact your credit score. Hard credit checks, however, can lower your score. Thankfully, even when your score is lowered by hard checks, it is only by a few points and for a short time.
Review your credit often enough and you’ll realize that your credit score is constantly changing. If you have a credit card, loan, or bank account, your credit score is updated at least every month. Sometimes, your score is updated more often than that. So while a hard credit check may lower your credit score, the lowered score won’t last long if you have good financial habits.
Finding Payday Lenders in South Florida
Looking for a payday loan in South Florida? Using only soft credit checks that don’t impact your credit score, Check Cashing USA can be found in Hollywood, Hialeah, Pembroke Pines, and beyond. So if you need some quick cash that doesn’t require a hard credit check, find the nearest Check Cashing USA location to you.