Why Does a Payday Loan Not Appear on My Credit File?

Payday loans are meant for people with bad credit, so payday loan lenders tend to avoid credit checks. This, however is double-edged sword -- you must use creditors that report to a bureau to help rebuild a poor credit history. If a payday loan does not appear on a credit file, it could be a good thing because payday lenders usually only report bad items.

Identification

If a payday loan lender does not perform a credit check, your payments will not show up on your credit report, according to LoanSafe.org. Some lenders that perform a credit check may report on-time payments to the credit bureaus, but they are not required to do so.

Potential

If you default on a payday loan, the lender could send it to a collections agency. The national credit bureaus frequently scan information on collections accounts, so it will eventually appear on your credit report as a negative item. Collections accounts are one of the worst items you can have on a credit report.

Using Good Payment History

Even if a payday loan does not appear on a credit history, you can still use successful payment to gain credit. Showing lenders that you paid your payday loan on-time could prove to them that you can handle a loan. Also, the payday lender may increase your limit or reduce interest if you have a history of repaying your obligation.

Tip

You should negotiate with your lender about an installment plan or partial payment to avoid a delinquent account, suggests Bills.com. As of 2010, eight states reduce interest rates and force payment plans once payday loans reach a certain maturity date. If the lender won't deal or you do not live in a state that regulates payday loan repayment, save as much money as possible to pay off your loan or consider settling the account, because payday loans can have triple-digit annual percent rates.