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Is A Payday Loan The Only Option Left?

Written By emilie dane on Monday, February 11, 2013 | 11:44 PM


Are you finding that online payday loans are about your only hope to get some extra cash? If this answer is yes, then it is time to take a close look at your finances. Maybe you will just need to learn to budget your income in a more financial friendly way, or like many Americans, dig yourself out of debt. Whichever the case may be, your credit score will depend on it.

Most often, when someone is using a payday loan for more than an occasional emergency, there are plenty of money problems already in place. Online payday loans are often blamed for damaging someone's budget, when for the most part; the loans gone bad are just the most recent problem. In order to keep direct payday loans from being the only remaining option for money help, you may want to take a close look at your credit report. This information will let you know exactly how much debt you carry and how well you manage it. If what you find on your credit report is keeping you from using banks or obtaining credit cards, then you will want to work at bettering your credit.

One of the first things you will need to do before any changes will take place is to organize your finances and prioritize your budget. If the first concern is building your credit, you will need to evaluate your debt and figure out how to manage your bills. Creating a budget and following a plan to battle your debt is the first step. Late payments easily damage your credit so set up automatic payments or set up online banking in order to keep any more dings off of your credit score. Payment history is very important to your creditors. Would you loan money to someone who is often late or doesn't pay back their loans?

Focus on paying off your debt. There are many creditors who will negotiate your debt if you are willing to pay it off at once. Any type of revolving debt, like credit cards, you will want to pay down or even off. Revolving debt is debt which can keep going around and around by spending and paying then spending again. This credit is ranked highly on your report. Installment loans such as home mortgages or car loans are not ranked as highly. If you can get a creditor to work with you, make sure that what gets reported to the credit bureaus is in your favor. You do not want to agree to any negotiations which will be reported as "not paid as agreed", you will be making payments which will only do harm to your credit. Before you agree to pay as negotiated, make sure the creditor will report your payments as "paid as agreed".

Don't close accounts. You may think this is a good idea to shut them down once you pay them off, but it is not. This will hurt your credit utilization ratio which measures your debt to how well you manage it. Keep cards open with low balances to increase your credit score significantly.

If your credit will not allow you to get new credit, you do have an option to get a secured credit card. This way the creditor has secured its payment and you can work at rebuilding your score.

Do your best to fix any past mistakes. Communicate effectively with your creditors to remove any errors mistakenly placed on your report. You will start to see results as wrong reports are remove and you begin to pay down your debt. Having more options available to you will give you more choices other than an online payday loan when the bills cannot wait for your next paycheck.

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