It is well known that credit bureau scores do not matter to approve you for an online payday loan. The loans are a simple approach to fast money no matter what your credit history is. No credit, low credit, bad credit, or even good credit. It doesn’t matter when it comes to a payday loan. Your credit bureau score is an important factor with bank and credit union loans. How are your credit bureau scores calculated?
Payday Loan Online Does Not Use Your Credit Bureau Score
Most other financial institutions are concerned with your credit bureau score. Your score might be the only thing that holds you back in acquiring lower-cost money. Do you know what factors measure your credit bureau score?
On-time payments – Creditors set up payment dates and send statements for debtors to pay a minimum amount by a certain date. When you are late, a creditor will report this information to the credit bureaus. Depending on how late, the severity against your credit score will reflect the period. Creditors will send in reports of increments of 30, 60, 90, or 120+ days late on your payment.
- If you are reported as 30 days late, it will affect your score when it is “currently” late. Once paid, the report will not hurt your score unless you are often late.
- Being late 60 days will also have no long-term effects as long as it is paid. Make sure it does not happen very often. It will have short term effects while it remains unpaid. Creditors will report once a month. Until the latest report is made, your score will be affected and could influence other financial opportunities to your disadvantage.
- Reports made against payments that are 90 days late will remain on your credit report for seven years, paid or not. Once you have reported as late for 90 days, creditors will assume that you are a riskier customer. Your credit score will reflect this by dropping in value.
- In being 120+ days late, the score does not drop any more than the damage from 90 days late. What makes your score drop more is that loans are usually sold to third party collections or “charged off.” These occurrences will be reported separately from the late report, which will lower your credit score more.
Negative Reporting From Your Creditors, Not Payday Loan Lenders
The number of derogatory marks will affect your credit score. If you are late on a payment, it will affect your score accordingly. Having multiple creditors reporting your late payments negatively will bring additional damage to your credit score. Reporting will count tax liens, repossessions, foreclosures, and settlements.
What is My Debt-to-Income Ratio?
Credit card utilization rate is a measure of how much available credit you are using at any given time. Divide the total amount of available credit by the total amount owed. The answer will be in percentage form. For example, if you have $10,000 available to spend with your total amount of credit and have balances that add up to $5000, your rate is 50%. Your debt to income ratio is figured similarly but with your income divided by debt. Both scores should not be larger than 30% without having negative effects.
Keep Your Credit Options Open
The average age of open credit lines, the total number of accounts, and hard inquiries into your credit history negatively affect your score.
The more creditworthy your credit profile looks, the more you will be approved for financial help. Those without a healthy score will have fewer options and will turn to companies that do not use a credit score to loan money, online payday loans, car title loans, and pawn shops.