Will a payday loan show on your credit report?

Most people think that getting a payday loan will automatically show up on their credit report. While that is true with personal loans, payday loans do not appear on your credit report. Here are some reasons why:

• When the loan is initiated, no credit check is performed. Your payday loan's approval is not contingent upon your credit rating; it's based on your employment and your ability to promptly repay the loan.
• Taking out a payday loan does not impact your credit because it's confidential between you and the lender- it's not reported to the major credit bureaus. Positive or negative, taking out a payday loan has no impact on your credit.
• Even if you pay the loan off early, your credit report isn't affected. The payday loan industry is heavily regulated and each state in the US has laws that govern this type of loan. You will always know how much interest you are paying, the payoff amount, and the due date. With personal loans, you would have a repayment schedule and your interest rate would be based on the size of your balance.

Regardless what type of loan you take out, the most vital thing you can do is to pay it off on time. With a payday loan, if you are even one day late, you will be assessed a large service fee in addition to the amount of the loan. The only way a payday loan could appear on your credit report is if a late payment is reported to the major credit reporting bureaus. Know your due date and make every payment on time. For those with good credit, doing this will help keep it that way- and for those with bad or no credit, it provides the opportunity to rebuild it in the future.