Can taking out a payday loan help rebuild my credit or improve my credit score?
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No. Payday loans are generally not reported to the three major national credit reporting companies, so they are unlikely to impact your credit scores or help you build credit.
Unlike other lenders, payday lenders generally don't use your credit reports or scores to determine whether you’re eligible for a loan. Most storefront payday lenders also don’t report any information about your payday loan history to the nationwide credit reporting companies. Although some payday lenders use information from specialty credit reporting companies.
However, if you don’t pay your loan back and your lender sends or sells your payday loan debt to a debt collector, it is possible the debt collector could report this debt to one of the major national credit reporting companies. Debts in collection could hurt your credit scores. Likewise, some payday lenders and debt collectors bring lawsuits to collect unpaid payday loans. If you lose a court case related to your payday loan, that information could also appear on your credit reports and may lower your credit scores.
If you experience an issue with a payday loan, you can submit a complaint to the CFPB online or by calling (855) 411-2372.