Three Things You Need To Know About Payday Loans And Your Credit

Payday loans are a great way to get fast cash when you need to pay an unexpected expense or you are running a little short between paychecks. While payday loans are not meant to be a steady source of income or take the place of budgeting and smart money management, they can be very helpful in dealing with short-term situations.

Payday Loans, Credit Inquiries and Your Credit Score

Most lenders that provide traditional signature loans will require a credit check before they extend credit to you. Payday lenders do not check your credit score or pull your credit report. This means that no inquiry will show on your credit report, and your credit score will not be affected in any way positively or negatively. If you need cash to get yourself out a bind, but you don't want to do damage to your credit score with a hard inquiry, a payday loan is definitely the best option.

Minimum Credit Score Needed to Obtain a Loan

Many studies show that borrowers with a credit score above 640 have the best chance of being approved for a traditional loan from a bank or credit union. Even at the 640 level, borrowers will still be paying less-than-attractive interest rates. Ideally, a borrower should have a credit score in excess of 700 for the best chance at getting a loan. If your credit score is below this number, a traditional signature loan is not the way to go. This is especially true if you just need a little extra cash to get you past a rough spot in your financial journey. If your credit score is low, a payday loan is likely your best choice.

Maximum Interest Rates Allowed by Law

The maximum amount of interest a lender is allowed to charge varies based on the laws of the state where the lender is located, and the type of loan. The maximum allowable interest rate for a traditional signature loan is generally less than the maximum amount allowed for payday loans. However, no state allows interest rates of more than 29% to be charged on any of these types of loans. Each state provides information on these limits. There are also several websites that have compiled charts of maximum interest rates by state.

If you are looking to make a large purchase like a home or car, or you are planning to consolidate debt, a payday loan is not the way to go. However, if you need to bridge the gap between paychecks or take care of an emergency, a fast cash loan is the best way to get the funds you need without dealing with credit checks and other related issues.

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The library is packed with books offering investment advice, but I found little success when following advice written five, 10, or 20 years ago. I didn't even realize that today's rapidly changing industries move so quickly that it's harder than ever to pick a winner for smart investing. Now that I've spent a few years myself working on developing my skills at choosing opportunities, I've decided it's smarter to share my own advice online rather than in a book that quickly goes out of date. I'll keep you up to date on the latest investment ideas, along with plenty of other financial tips for money management at any age.