PDLs are apparently advising that the repayment of a PDL within the contractual period will help your credit rating. This appears to be inaccurate.

Main stream lenders are viewing the use of a PDL or short term loan as a negative. That at some point you have , even temporarily, had a financial hiccup.

Have you taken out a Pay Day Loan - repaid it within the contractual period and now find that you have been denied mainstream lending at preferential rates, or has your mortgage application failed because in the past 6 years you have needed to find short term borrowing.. fast !

Please post a summary of your situation below.

Most of the articles I have found, warning of this problem, are from 2012

Wonga: Payday loans 'do wonders' for your credit rating... really?

Controversial payday loan firm Wonga has written to customers implying taking out one of its loans can "do wonders" for your credit rating.

 

The reality is often the opposite, as many lenders view the fact you've used a payday or short term loan as a negative, as it can be a sign you're in financial difficulty.

 

 

While the Wonga statement doesn't specifically say having a payday loan will help your credit rating, it says if you pay it off, and by implication that you therefore have one, you will benefit.

 

But it fails to mention, or warn customers, that even having a payday loan can make you look unattractive to other lenders.

http://www.moneysavingexpert.com/news/loans/2012/11/wonga-payday-loans-do-wonders-for-your-credit-rating

I am sure I have seen other articles that confirms, even if you repay a PDL on time, it will still have a detrimental affect on your credit rating/scoring as main stream lenders will see it as a sign that the borrower was under pressure at some time.

The following was taken from a guardian article

Payday loans can put credit rating at risk

However, those who use payday loans to avoid unauthorised overdraft fees could have other problems. The Financial Ombudsman Service told The Observer that while it has had few complaints about the loans, it has seen evidence mortgage lenders discriminate against payday loan borrowers.

 

"The number of complaints we receive about payday loans is relatively low but we have had a number of inquiries from consumers who have been told by their lender that previous payday loans they have taken out – and paid off on time – have and will continue to have a detrimental impact on their credit rating," said a spokesman for the service.

 

Credit reference agency Experian lists payday loans separately rather than including them in a general overview of borrowing history. James Jones, head of consumer affairs for the agency, said that while some lenders do not differentiate between payday loans and other forms of credit, "some high street lenders might see the fact that you've resorted to payday credit as a sign that your finances are under pressure … if a particular lender's experience is that customers who take out payday loans are more likely to miss their repayments, this will be reflected in their credit scoring".

http://www.guardian.co.uk/money/2012...-credit-rating

Another article from 2012

Mortgage provider GE Money has said that it will not process applications from those who have taken out a payday loan.

 

Borrowers who have used payday loan companies are in danger of permanently blighting their credit rating. Mortgage provider GE Money this week announced that it would not process home loan applications from consumers who had taken out short-term high-interest loan in the past three months or more than twice in the past year.

 

http://uk.finance.yahoo.com/news/payday-loans-could-cost-mortgage-141535900.html

The following question was asked on another thread -

if someone subsequently discovers their credit rating trashed, because they were advised having a PDL could enhance their credit rating - what could they do about it ?

What about mis-selling on the basis that they seek to improve credit rating but they infact damage credit ratings due to being payday lenders....is there a guide or advice anywhere for that?

That had occurred to me...but....first they would need someone to take them to court for a test case presumably...

 

e.g. credit rating score of 1 out of 5...and just because you are working they give you a loan. So much for them doing proper credit checks! Martin Lewis should be the one to know if they can be done for mis-selling they would all be guilty and that would be the end of them...

I had an e-mail sometime telling me that having one from a company beginning in V I can't remember now but saying that if I took it that it would improve my credit rating which I thought was great for a small price.....surely if that's the basis in which someone took a loan out and it isn't the case, especially given that the lender has the resource and knowledge of the industry to know this isn't the case then they've mis-sold the loan??

 

I might be being a bit too simple here......

I know of somebody who went for a review of their mortgage with their bank of 20yrs,

was offered a better rate,

accepted it,

the mortgage advisor went through the formalities and

told my friend that the preferential rate wasn't being offered,

the reason?

Payday loan,

she was told this verbally by the adviser.

uckily the relationship she had with the bank and the savvy of the adviser who was able to override the computer,

allowed her to get the better deal.

Just thought I'd add my tuppence x

Thanks scotgal, that is the kind of thing we want to know about. I am pleased that your friend didn't suffer adversely. However, it looks like it could have ended in tears !

Too right citizen, all too often banking staff hide behind 'computer says no'. So I guess the info that PDL can improve your credit rating is a pile of coddles. My friend had an almost impeccable credit record and the mortgage adviser also told her that credit card companies can also cut your credit limit if they see you're tinkering with PDL x

I applied for a phone contract and was turned down. I then used wonga a few times, only borrowing small amounts. Then hey presto I got my contract. I'm no fan of wonga, but for me it seemed to help!

I applied for a phone contract and was turned down. I then used wonga a few times, only borrowing small amounts. Then hey presto I got my contract. I'm no fan of wonga, but for me it seemed to help!

When was that?

You see it depends on the lender but most higher risk lenders i.e mortgage companies would differentiate between PDL's and other loans and would negatively class it as a sign of desperation. Especially having several agreements with then in a short space of time.

When was that?

 

You see it depends on the lender but most higher risk lenders i.e mortgage companies would differentiate between PDL's and other loans and would negatively class it as a sign of desperation. Especially having several agreements with then in a short space of time.

About 18 months ago

About 18 months ago

This was around the time that CRAs started marking Pay Day Lenders differently on credit files so yes it would have just looked like you had a loan and you paid it off and may have been a positive factor in your case.

Those more recent probably won't have been so lucky as it seems to have an adverse impact.

I have had so many PDLs all paid off in full that I know my rating is trashed. I do have a mortgage which is up to date so when I go for a new one it won't be my first.

I'm hoping that my credit union will do my mortgage when I'm ready.

I think in order to prove mis-selling here we need to find ad's or other promotions via e-mail letter etc to show that they suggest that PDL's help your credit file, after the CRA's put their new policies in place.

Does anyone have anything any youtubes of ad's etc?

I'm wondering if a freedom of information request to banks asking them if an applicant has had a pdl would this affect there ability to obtain credit might answer the question

Don't think banks are covered under the FOI act.

However, look here http://www.moneymarketing.co.uk/mortgages/analysis-big-lenders-dont-exclude-payday-loans/1054552-article.

We just need to find the evidence of the PDL stating help improve credit rating. Is there any way of accessing this past information on an archive or something via google or whatever?

If I remember rightly wonga used to say it may help your credit rating

Be interesting to know who's behind this website

http://www.paydayloanguys.co.uk/credit.php

Domain name:

paydayloanguys.co.uk

Registrant:

Pay Day Loan Guys

Registrant type:

Non-UK Corporation

Registrant's address:

30-11 Leonard Street

London

England

EC2A 4QS

United Kingdom

Registrar:

GoDaddy.com, LLP. [Tag = GODADDY]

URL: http://www.godaddy.com

Relevant dates:

Registered on: 27-Sep-2012

Expiry date: 27-Sep-2017

Last updated: 16-Oct-2012

Registration status:

Registered until expiry date.

Name servers:

ns108.eukdns.com

ns109.eukdns.com

WHOIS lookup made at 22:26:42 27-Jul-2013

Theres no Company registration number shown, nor is there an ICO reference or credit licence. I would get a complaint in to the OFT and ICO, see what they say.

However, i would hold off for now as they seem to have an incomplete website. Could possibly be an up and coming PDL that havent got their licence yet.

Agree, want to find something somewhere of Wonga making suggestions they can improve credit....not having much luck yet. Where are old TV ad's stored lol?

Most of their adverst got pulled for misleading people. Even the puppet ones did, so now theyve gone with CGI puppets instead.

Wonga.com - We are fair and transparent, we don't want any surprises - http://www.tellyads.com/show_movie.php?filename=TA15091

Can't find what I want though!

Most of their adverst got pulled for misleading people. Even the puppet ones did, so now theyve gone with CGI puppets instead.

So, if they were pulled because they misled, how can they be found to use for a complaint???

This would explain why I can't find them anywhere then.

I'm sure I've got some emails from cash genie which mention credit files being improved by repaying on time.....

Will check my trash file for you x

Thanks,

See here for the hidden position of Wonga http://www.openwonga.com/faqs/page/2

Here is PayDayUK saying they may improve your credit https://www.paydayuk.co.uk/your-credit-rating