There’s no doubt that short term loans can help many people, but there are risks associated with them. One of the biggest dangers is to your credit rating, and here are a few points that you should look out for when it comes to these types of loans.
Only Borrow What You Can Afford from Same Day Loans
Because you have to pay the money back at the end of the month, you should only borrow what you can afford. This means looking at your monthly income and outgoings. The problem for many people is that they know they need to borrow a certain amount and don’t worry about the consequences.
Borrowing too much will overstretch your budget and then you’ll struggle to pay the money back at the end of the month. This could lead to you needing an extension or another same day loan. This will only lead to problems and one of those is a bad effect on your credit rating.
Don’t Take Out Lots of Short Term Loans
Yes, taking out one of these loans could help you improve your credit rating but taking out a lot will have the opposite effect. Something that you really need to think about is how you’ll look to other lenders when they see your credit report.
Most same day loans that you take out will appear on your report, along with the date that you signed for them. This is especially the case for those that you apply for over the Internet. Other lenders will see this and start to think you’re overstretching your budget. You’ll be seen as a high risk lender and will find that you can’t get credit anywhere else. Think about the amount of money that you’re borrowing and limit it as much as possible.
Bounced Check Fees from the Lender and Your Bank
If you do take out more than you can afford, you’ll end up with bounced check fees from both the lender and the bank. This will also affect your credit rating because it will show up. You’ll be seen as an irresponsible person financially and it will affect the chance of getting credit in the future.
You’ll need to be careful with how much money you have and make sure you only borrow what you can afford. Never take out the total amount of your paycheck and always make sure you make a budget to find out just how much you can afford to borrow.
Some short term loans are helpful, but only if you are sensible. Only take one out if you need the loan for an emergency and make sure that you pay it back on time. Just keeping it for an extra day can do a lot of damage and you’ll also find that you end up paying a lot more money back in the long term.