Payday loans are the fastest growing lending type on the market and even though people just need then to survive the rest of the month or have an emergency they didn’t plan for, some are using them for far more than for just borrowing – with some people seeing them as a way to boost their credit rating – but does it work?
Payday loan applications do go on your credit file – when you apply for a payday loan, the application usually goes on your credit file and when you pay it off, it also shows up.
Repaying on time is likely to be positive – as there are no hard or fast rules when it comes to credit scores. Each lender scores you differently based on its own wish list of what it views as profitable customer.
Credit scoring works on behavioral prediction, meaning they use the way you’ve acted in the past to predict your likely future behavior and thus calculate whether they’ll make money from you. In general paying off credit one time shows you’re more reliable, therefore this will have a very strong impact on your credit score.
So in short, yes it works but just make sure that you pay it back on time.