When Americans find themselves in extreme financial distress, as millions are today, it may seem that the only option for relief is to get a payday loan. But the truth is they are unfair and costly, and take advantage of people who are most vulnerable.
Payday loans often come with high finance charges — and if you’re unable to pay the loan back on time, you will be charged even more, and the loan could potentially go into default and damage your credit score. Our advice is to avoid them at all costs!
Are you in need of financial help – to pay rent or other expenses?
Before trying to get one of these costly loans, talk to your landlord and other creditors to let them know you need financial assistance. They may be willing to work with you, especially during this tough time. Ask them what options for leniency are available – and pay what you can in the meantime.
If you need additional help, consider asking family members and friends first. Depending on how much you need, you can ask multiple friends and family for smaller amounts rather than borrow from one person. Offer to pay a “fair” interest rate to incentivize them and make sure to offer a repayment schedule as well.
If you have no other choice, only apply for loans you can afford to pay back and with the lowest cost. Be sure to look through all offers carefully – fees, interest rates, and if there are collateral requirements. Remember, applying for loans can negatively affect your credit score so be cautious about how and when you do this.
And when you’re back on your feet…
Once you get back on solid footing, start an emergency savings fund to help you weather future storms — and work towards setting aside three to six months worth of living expenses. While this may seem difficult to do, there are many ways you can budget your money and cut expenses to help you achieve your goals. Fortunately, there are many resources out there to help you find ways to cut spending and get your savings plan started, such as:
How to create a budget – The Motley Fool
Increase Savings and Rebuild your Emergency Fund – Smart About Money
How to Save Money – 10 Easy Tips – BankRate.com
Help your credit score when you pay your rent
When you’re able to pay your full rent again, having it reported will help raise your credit score. If you want assistance with rent reporting, contact RentReporters and we’ll work with your landlord on your behalf. We’ll also provide your TransUnion Vantage credit score for free every month so you can see your rating increase. Find out more at https://www.rentreporters.com/price/.