Cash advance loans are a good option if your looking for cash quickly and easily when you are not able to borrow money from elsewhere. Reason being is that sometimes emergencies takes higher importance than fees incurred with pay day loans, such as medical bills or car repair.
But do cash advance loans help your credit once you paid the loan back?
When you take out a loan from a cash advance lender, the lender does not report to the credit agencies that you took on new debt.
There have been new laws in 2016 enacted for cash advance lenders to access your credit information before considering you for a loan, using special credit agencies to report your history with these types of loans. But the purpose of these reporting is to limit the amount unqualified consumers can borrow, so as to keep them from racking up more and more debt.
In general, paying your pay day loan back in full does not help improve your credit. However, if you don’t pay your loan back, the lender can take the unpaid debt to a debt collector that would then report this debt to one of the major national credit bureaus (Equifax, Experian, and TransUnion). In this way, uncollected pay day loan does affect your credit score negatively, which results in higher fines and possible judgement. It is important to understand then, that there is no reason to take a pay day loan to improve your credit.
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