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Information on payday loans reporting to credit bureaus

Can payday loans report bad debtors to credit bureaus?

Can payday loans report bad debtors to credit bureaus?

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Bill's Answer
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Bills.com | Find Learn Save

Yes, defaults on a payday loans is reported to the credit bureaus just like other loans. These small loans, often called "cash advance loans", "check advance loans", or "deferred deposit check loans", are a frequent pitfall for consumers. A fee anywhere from $15-$30 per $100 borrowed is charged for an average loan of $300. With rates so high and the term of the loan so short, there's no wonder that a very high percentage of these loans are rolled over by the borrower again and again so that the accumulated fees equal an effective annualized interest rate of 390% to 780% APR depending on the number of times the principal is rolled over.

You may be in luck in regard to your difficulty in repaying these loans. There are eight states whose payday loan regulating statutes require lenders to set up an installment repayment plan if an account reaches the maximum number of rollovers allowed by law and the debtor declares that he/she is unable to pay the balance due. Check out the payday loan information from the Consumer Federation of America at Paydayloaninfo.org, where you will be able to read all about these loans and the various state attempts to regulate them. Follow the "state information" link to find out the specific regulations for payday lenders in your state, and if you live in one of the eight states requiring installment payments. If your state does require repayment plans, and the lender still will not accept payments, call your state regulator of payday loans, usually an assistant Attorney General, and complain. You should get the results you want after the Attorney General's office becomes involved.

If you are not in one of those states, you may want to consider simply making payments to the lender of whatever you can afford to pay down the balance of the loan over time. In most states, the rollover limit will soon be reached, and state law will cap the interest rate the lender can charge. If the lender will not accept your payments, simply put what you can afford aside each month until you have enough money to either pay off the loan or to offer a settlement. Read up on the regulations in your state to find the best strategy for your situation.

Bills.com also offers more information on the Payday Loan Information page, and has answered reader questions about payday loans in California, Florida, Illinois, Massachusetts, Missouri, Texas, and Virginia.

If you do not repay a payday loan, the payday loan company has several legal remedies, including wage garnishment, levy, and lien. See the Bills.com resource Collections Advice to learn more about the rights of creditors and debtors.

I hope that one of the strategies I have discussed above will help you resolve these payday loans, and help you Find. Learn Save.

Best of luck,

Bill

www.bills.com

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4 Comments

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  • GR
    Mar, 2013
    Gabby
    San Antonio, TX
    I paid my payday loan off without ever defaulting. Why wouldn't this go on my credit to raise my score? It's a loan, so you'd think that if you pay it off in full it would improve your score. Mine had no impact.
    0 Votes

    • BA
      Mar, 2013
      Bill
      Creditors are not required to report information to credit bureaus. However, if they do, the information must be accurate, or you have grounds to dispute the errors. Creditors can choose not to report an account that is paid as agreed, but that same account can appear if the account goes to collections. It is rare for medical providers, utilities, landlords, and payday lenders, for example, to report positive activity to the consumer credit reporting agencies.
      0 Votes

  • 35x35
    Nov, 2010
    james
    I took out a pay day loan and defaulted and it was never reported. I know someone else who only owed them $250.00 and they now owe over $7,000 because he never paid his balance, he checked his credit report and it was never reported either. Strange.
    0 Votes

    • BA
      Nov, 2010
      Bill
      Creditors are under no obligation to give information to the credit reporting agencies. However, if they do give information to the credit reporting agencies, it must be accurate.
      0 Votes

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