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Paying off payday loans on time, every time, is a great way to build up your credit score.

True

False

False. Payday lenders do not report your borrowing activity to the three big credit bureaus, so the activity will not influence your credit score.

A payday loan is designed to _______.

Pay off your mortgage

Tide you over until your next paycheck

Provide an open-ended line of credit

Tide you over until your next paycheck. A payday loan is set up to pay short-term bills and to be repaid with your next paycheck.

Predatory lending can occur with which of the following?

Tax refunds

Payday loans

Rent-to-own stores

All of the above

All of the above. All of these and many more can be involved in predatory lending. You should evaluate all of them carefully.

How might a payday loan affect your credit report?

If you don't pay the loan back, it could get turned over to a debt collector.

You could get sued if you don't pay the loan back.

Small credit reporting agencies might put your payday loan on a credit report.

All of the above

All of the above. The big three credit reporting agencies don't put payday loans on your report, but there are other ways that the loan activity could show up on your report.

What is a typical fee on a payday loan?

15%

50%

100%

15%. Fee rates range from 15-20% of the amount borrowed.