I appreciate I will get some unhelpful remarks here, but anyway here goes.

I have been a bit rubbish recently and overspent, causing me to take out some payday loans just as short term cover. I'm not in any financial trouble with them, they are all being paid etc, but I currently owe the following:

MEM Capital - £75 (due 30/10)

Wonga - £300 (due 27/11)

Quick Quid - £150 (due 30/10)

Cash Choice - £187.50 (due 27/11)

Payday Express - £150 (due 27/11)

What I want to know is, prior to taking these out I had really good credit and would have been able to take out a mainstream loan (but this just wouldn't have been quick enough at the times I've needed the money) but that of course is what I now want to do, take a loan out of about 10k over 2 years. I'm in FT employment, earning £25k a year, no defaults or CCJs or anything, and am now a homeowner too.

If I try to apply for a loan now, will these outstanding/recent payday loans cause me any trouble? They will all have been paid off or be in the process of being paid off, as I am managing them fine. Would a lender see this as me being bad with money in terms of needing them, or good in terms of paying them all off okay?

I know a payday loan is not the cheapest or most sensible way of dealing with cash flow problems, but there's not many other options that are so quick and easy. I just hope I've not damaged my chances of getting the real loan I want for home improvements now.

Any advice you can give would be most appreciated.

Thanks

Micha

Hi Micha,

In a recent interview with me, our payday loans expert Tim suggested that if you're using a payday loan more than three times a year, your finances aren't working. Short-term borrowing should ideally be used for emergencies only, I really recommend avoiding payday loans on this kind of scale.

To answer your actual question, though, not all payday loans require a credit check to take them out. Did your lenders request your permission to conduct a credit search? If they did then this borrowing will show up on your file (although repaying them on time will prevent them damaging your rating and meeting debt on time can enhance it).

If they did not then they won't be flagged up on your credit rating.

On a side note, if your credit rating is good then a credit card would almost certainly be a cheaper way of meeting unexpected costs - although as I said (and without wishing to appear at all preachy), it sounds as though you've been struggling to manage so it may be worth assessing your finances before allowing yourself more credit.

You can check your credit rating yourself very simply with a firm like Experian. It's not expensive to do and it will show you exactly what a prospective lender will see.

Good luck,

Felicity

Hi Felicity

Thanks for getting back to me. All the loans were for emergencies, like car tax etc, I wish I had taken out only the one, but it seems to always be the way that things all happen at once. In general terms, my credit has been fine. I paid off my student overdraft and reduced that down to nothing, and I suppose I should really have looked into a more reasonable way of obtaining the credit I needed at the time, but as I say nothing seems so quick and easy.

I don't think any of the payday loans companies took out a credit check, so if that's what a lender would see, then I guess my situation might not have been impacted by these loans. To be on the safe side I will pay them all off before I think about applying for my loan.

Would you recommend checking my credit report before applying for a loan, or waiting to see if I am accepted first? The last time I did it was about a year ago, after paying off my debts at the time, just to see where I was up to. That's what makes me think I have good credit still.

Thanks for your advice anyway,

Micha

Do you know, I would always recommend checking your credit rating before applying for any loan.

Applying for credit leaves a 'footprint' on your file, so a rejected application can lower your rating. So, by finding out whether you have a good credit rating or not, you can apply for loans you are more likely to get (clearly the best rates are reserved for those with the best credit score) and avoid damaging your credit rating with failed applications.

Just to reiterate, if I were you, I would carefully examine my finances to avoid using payday loans in this way again.

Cheers,

Felicity

Thanks Felicity.

I think they have caused more trouble than they are worth, in terms of affecting my stress levels if nothing else. I will definitely be steering well clear in the future!

I'll get my credit report then once they are all paid off, and hopefully my loan will go through okay.

Thanks for your speedy responses and sensible advice.

Micha