Posts Tagged ‘payday debt consolidation and credit score’

Some Basic Facts About Payday Debt Consolidation And Credit Score

If you are drowned in the turbulent ocean of nasty payday debts and are looking out for ways on how to consolidate these debts, one of the most important factors that you must consider is about how payday debt consolidation and credit score affect each other. It is very important for you to understand that your credit score plays a very important role in handling your payday debt problems. It is true that there are hundreds of debt relief companies out there that offer a wide array of programs that can help you pay off your debts faster and in a way that is more convenient to u. But, at the same time, it is also important for you to keep in mind that these programs are not offer to you free of cost; the fee they charge depend on how good or bad your credit score is.

Following is a brief rundown on some of the basic facts regarding payday debt consolidation and credit score.

Payday Lenders Usually Do Not Report To Credit Bureaus

The first thing that is very important for you to keep in mind is that your payday debts usually go unreported to the credit bureaus. Unlike conventional lenders, payday loan companies do not report the payment or non-payment toward your payday loan accounts to the three major credit bureaus that include Equifax, Experian and TransUnion. They report the details only to some small credit agencies that usually do not play any role in determining your FICO score. Therefore, even if you are behind the payday debt payments and hundreds of dollars are outstanding in your name, it still possible to have a good credit score provided you have been making the monthly payments towards other conventional debt accounts (such as mortgage and car loans) and utility bills in a timely manner. Therefore, you are advised to review your credit score thoroughly before you contact any debt consolidation agency; do not assume anything on your own. You must also note that every citizen of the United States of America has the legal right to obtain a free credit report from the three major credit bureaus, at least once every year.

Your Participation In A Debt Relief Program Is Reported To The Credit Bureaus

Though the payment or non-payment toward payday loan accounts may or may not be reported to the credit bureaus, when you sign up for a debt consolidation or any other debt relief program, relevant entries are made in your credit report regarding the same, which can be quite damaging for your credit situation; it can affect your FICO score adversely. However, there are still ways to deal with this situation. First of all, it is very important for you to understand that the credit bureaus do not make entries on their own; all entries on your credit reports are made only after someone (such as, your creditor) reports the same to the credit bureaus. Therefore, if you can convince your payday lenders not to report about your participation in such debt relief programs, you can protect your FICO score.

In short, if you are considering participating in a debt relief program to handle your payday debts, you must understand how payday debt consolidation and credit score affect each other.

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