How to Use Payday Loans to Repair Bad Credit

If you’ve already got a bad credit rating, you might think it’s unusual to apply for more debt in order to get out of financial trouble. Yet, if you do it the right way it’s very possible to begin repairing bad credit using small payday loans to your advantage.

The key to getting this right is to create a credit repair strategy and then work on sticking to your goals. If you can get it right, you should find that your credit score starts to improve much quicker than you might expect.

Here’s how to repair a bad credit score using payday loans:

Step One: Make a List

Write down all your outstanding debts on a sheet of paper or type them into a spread-sheet. If you’re behind on any payments with those debts, highlight these amounts.

Step Two: Apply for the Right Payday Loan

Spend a bit of time researching your options as far as payday loans go. You should be able to find companies offering cash advance loans without doing a credit check on you. These companies are happy to advance your money without bothering about how bad your credit history looks. On a positive note, some of these also don’t report your new debt to the credit reporting agencies, so this won’t affect your credit score any further.

When you find the right company, be very sure that you only apply for an amount of money you know you can repay easily. A good example is to borrow only a couple of hundred dollars to start out.

Step Three: Pay Your Outstanding Debts

When the money from your payday loans arrives, use this cash to pay off your past due debts. You may have unpaid bills or missed debt repayments or any other forms of debts. It doesn’t really matter what they are, as long as you use the money from your cash advance loan to catch these up so they’re not past due any longer. This keeps your creditors happy and stops them from harassing you to make more payments. What’s more, those creditors are forced to report that you’re making payments on your debts, which helps to improve your credit score overall.

Step Four: Pay Off Your Payday Loan

Work on ways to repay your payday loan amount as quickly as you can. You don’t want to pay more interest than you absolutely have to, so pay as much as you can afford to clear that debt amount.

Step Five: Re-assess Your Debts

Once your original payday loan is repaid, take a careful look at the rest of your debts. Write down what’s owing to your creditors and see if any other payments are past due. If you can afford to make your regular payments on those debts, continue doing this.

However, if you’re still falling behind on other payments you can consider applying for another payday loan. If you use the same lender, you’re likely to get a reduced interest charge for being a repeat customer. This means it’s cheaper for you to borrow money that doesn’t impact your credit rating.

Step Six: Rinse and Repeat

Continue borrowing small, easily manageable amounts of money from your payday lender to help pay off any of your unpaid debts. As those are paid off, your credit rating will start to improve. Your creditors are forced to report that the debts are now paid, which improves your score.

As the payday lender you chose won’t report your credit activity to the credit reporting agencies, you can use this tactic for as long as you need to in order to clear your bad debts and regain a good credit rating.

Step Seven: Create Financial Goals

If you’ve been struggling with bad credit for some time, it’s very likely that you have no real financial goals. Yet, once you manage to pay off your past due debts and begin repairing your bad credit rating you have the opportunity to start working on some positive financial goals.

After all, if you’ve been repaying your payday loans on your current income, you should be able to use that money for other purposes once you pay it all off again. This means you can work on keeping up with other debt repayments on time again. It also means you might be able to start work on a savings plan so that you never have to worry about debt problems ever again.



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  • Janice says:

    Need a small loan until i get my taxes back.

  • Connie Sites says:

    Thank you for the information above this is a very helpful.

  • Araceli Cossio says:

    I just read what your advise and that is exactly what I am desperately trying to do. If I could get a loan between 2000 and 3000 that I can easily pay back in 6 months and I would be caught up with the bills and I have and completely pay others so I may pay off this loan asap. Nobody wants to help.

  • Lisa Kershner says:

    Thank you for your information because great minds do think alike!! And I just started getting out of a bad score hole to fair by using payday loans..This is very good news…I can attest to your statements as a sure fire way to skyrocket yourself into stardom!!..anyway I do however know that for years Transunion has posted both in my addresses and my phone numbers. That makes people think I’m lying on apps for credit about where I work live and work..Just giving another way credit can be damaged..I just wondered how you go about fixing that.?

  • Lawrence Campbell says:

    I thought the forgoing information was pertinent and correct for the most part…As with any lenders, or more to the point advertisers, there’s always a downside that’s ambiguous – owing to the fact that every one of the organizations involved with loans want you to participate/subscribe to something else, e.g.”free” credit reporting, etc. None of them are free. For that matter, it’s quite confusing trying to remember to cancel them. “Free” becomes another burden, and every creditor is hooked up with their own rendition.Any thoughts on what good does it do to add another twenty/thirty/forty/fifty dollars a month to a service that’s more self serving than helpful?

  • rebecca gantt says:

    Need a small loan for christmas

Payday Consumer Notice:


The APR of a payday loan varies in each state and depends on the lender, the advance amount, fees and terms of the transaction. The APR in our network of lenders can range from 265.36% to more than 700% on 14 day terms.

Implications of non-payment

Implications of non-payment vary from lender to lender and by state regulations. If you are unable to repay your loan you may have one or all of the consequences listed below depending upon the terms of your lender. Fees may include but are not limited to: insufficient fund fees, administrative fees, late fees, non-payment fees, court costs and legal fees.

Collection Practices, Credit Score Impact

Payday Loans are due and payable in full in one payment at the end of the loan term, unless the Lender offers renewals or other repayment options. Make sure to review the terms and conditions of your lender if you fail to pay on time.

  • Late payments of loans may result in additional fees or collection activities, or both. Each Lender has their own terms and conditions, please review their policies for further information.
  • Non-payment of credit could result in collection activities and your account could be turned over to a collection agency. Each Lender has their own terms and conditions, please review their policies for further information.
  • Failure to pay your loan on time could result in your lender reporting the delinquency to a credit reporting agency. This could result in the lowering of your credit score which could make borrowing more expensive in the future.

Renewal Policy

Renewal policies vary not only by lender but also by state regulations. Every Lender has their own renewal policy, which may differ from Lender to Lender. Renewal fees vary by lender. Please review your state regulations and you lender's renewal policy, terms and conditions.