Cash till payday loans are the fastest growing lending type on the market. They exploded in the UK in 2006 and are meant as a short term borrowing solution i.e. less than a month. They are easy to apply for and obtain and if you repay within the agreed timescale, you will avoid the high rates of APR. They can also be used to improve your credit score.
Cash till payday loans are usually accessed for an emergency because of the nature of the loan. However many people have realised the fact that accessing and repaying a payday loan in accordance with its terms and conditions actually leaves a positive credit footprint on your credit file. Thus it improves your credit rating.
How credit ratings work
Having a good credit rating is important as this means that lenders of products and services will work with you and offer you more preferential rates. For example a good credit rating incurs a better mortgage rate.
Having a poor credit rating limits the products and services that you can access e.g. credit cards etc. Poor credit ratings can be incurred by missing payments, overspending and having too much credit.
How your credit rating can be improved
To improve your credit rating you firstly need to access your credit report from one of three UK vendors, Experian, Callcredit and Equifax. Once you have done this, rectify any anomalies on the report and if your score is still poor, access a payday loan.
Accessing a payday loan
Accessing a payday loan is simple. Choose one that suits you from the many on the market and apply online or in store. You should have a response within an hour and the deposit in your account within 24 hours.
You can then repay the loan plus the fixed fee (usually £25 per £100 borrowed) anytime you wish before the 30 day period.
Once you have completed your transaction, a positive footprint will be left on your credit report to show that you managed your debt within the terms and conditions of the loan. This means that your overall credit score will improve.
Note that this process will only be effective if you make a full repayment on time. If there is any danger that you will not be able to follow this process, do not start it as you will just end up with more debt.