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Will Payday Loan Consolidation Hurt My Credit?

We sometimes get asked about payday loans and debt consolidation. Payday loans are a quick way to borrow cash for unexpected expenses. These loanscan be repaid in the next payday.

Although this may seem like a great way to solve cash flow problems, payday loans can quickly become a problem if they are not repaid within the first pay period.

Credit and payday loans: What they can do to your
credit

Payday loans are not usually reported by the major credit reporting agencies. If the borrower defaults, they can be sold to collections. Once the collection agency has purchased the debt, it is able to report it to credit agencies.

The debt will be reported to credit agencies. Payday lenders may file lawsuits against borrowers if the loan isn’t paid. Non-payment of loans may be grounds for lawsuits by payday lenders.

This judgement could show up on your credit report. This could negatively impact your credit core. Other lenders could use this information to report your history of payday loans.

There are many options for payday loan relief

Consolidating your debt can make it easier to pay off any payday loan debts, or any other debt. But, “debt consolidation”, can also refer to two things. Both should not have an impact on your credit score, but one will.

What is the difference in debt settlement and
consolidation?

A debt consolidation loan is a way to consolidate debts. A bank will grant one loan to pay off all the other loans. Consolidation loans have a lower interest rate, but they are generally available for a longer time.

Consolidated loans offer a shorter repayment term and lower interest rates than traditional loans. Consolidated loans will make it easier for you to manage your debt payments. Consolidation loans can show you how much debt was “paid in full”according to credit reports. This is a good thing.

 

Many people refer to debt consolidation as part of a debt settlement plan. Consolidation involves making one payment to a company, which will then
distribute the amount to your creditors.

A debt settlement company can negotiate a lower settlement than the original agreement.

 

Your credit report will list the accounts as “settled”, which indicates that they have not been fully paid as per your contract. Settlements can negatively impact credit scores.

You must keep up with your debt payments in order to qualify for various debt consolidation programs. It can lead to a major credit score loss if you don’t pay yourbills on time.

 

Choose a Reputable Company

Do your research before you sign up for a debt consolidation plan. It is crucial to understand the type of program or loan it is.

It is your responsibility to ensure that payments are received on time.You will be notified if the company that you used to pay for you does not pay.

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