A payday loan appears on your credit file like any other credit account, showing when it was taken out, the amount and whether it was repaid on time. If you kept up with every payment, it will not create a default or missed payment marker in its own right. Even so, some lenders may look at a history of using short-term, high-cost credit less favourably than other borrowing, on the view that it can suggest financial strain, even where every payment was made.
This page looks at how payday loans actually show on your file, why some lenders take this view and others do not, and what tends to help. For the wider picture on credit scores, see remortgaging with a low credit score.
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In short
- A repaid payday loan does not create a default or missed payment marker on its own.
- Some lenders may still view a pattern of short-term credit use less favourably.
- How recent and how frequent the use was tends to matter more than a single, older loan.
- Lenders and criteria differ, so this affects choice rather than ruling out a remortgage.
How do payday loans show on your credit file?
A payday loan is recorded like any other credit account: the lender, the amount, when it started and ended, and your payment record. If you repaid on time, there should be no default or missed payment marker attached to it specifically. The entry itself does not disappear quickly, and typically follows the same 6-year pattern as other credit entries.
Where payments were missed, or the loan was rolled over repeatedly, that is recorded too, and can lead to the same kind of missed payment or default markers as any other credit product. See our page on remortgaging with missed payments if this applies to you.
Why might a repaid payday loan still matter to a lender?
Some lenders take the view that using short-term, high-cost credit, even when fully repaid, can be a sign that someone needed money quickly and had limited other options at the time. Because of this, a payday loan can sometimes be looked at differently from, say, a store card or a car finance agreement, even where all three were repaid without issue.
This is not a universal rule, and there is no single published list of which lenders mind and which do not. Some are far more focused on your overall payment history and current affordability than on the type of credit you once used.
What tends to matter most about payday loan use?
| Factor | Why it may matter |
|---|---|
| How recent it was | A single payday loan from several years ago tends to carry far less weight than recent or ongoing use. |
| How often you used one | Repeated use over a short period can look different from a single, isolated loan. |
| Whether payments were kept up | A default or missed payment marker matters more than the type of credit it came from. |
| What else is on your file | Payday loan use alongside other credit issues is assessed as part of the whole picture, not in isolation. |
General information only. Each lender decides how much weight, if any, to give this.
What can you do if payday loans are affecting your options?
- Avoid further short-term borrowing in the run-up to applying, so your file shows settled, stable use of credit.
- Check your credit reports from Experian, Equifax and TransUnion, since not every lender reports to every agency.
- Build a longer recent history without payday loans, since time and a clean record afterwards both help.
- Speak to a specialist adviser, who can look at your whole file and suggest lenders whose criteria are less focused on this specific point.
How this fits with your wider credit picture
Payday loan use is rarely the only thing a lender looks at. If you also have other credit issues, such as defaults or a county court judgment, an adviser will consider the whole file together rather than any single entry in isolation.
If several credit applications, including any payday loans, have left a run of recent hard searches, that pattern can matter as much as the payday loans themselves. Our page on too many credit searches explains why, and what tends to help.
What may affect a remortgage with payday loan history
| Factor | Why it matters |
|---|---|
| How recently you used a payday loan | Older, isolated use tends to matter far less than recent or repeated use. |
| Whether every payment was made on time | A clean repayment record avoids the more serious default and missed payment markers. |
| Frequency of use | Repeated short-term borrowing over a period can be viewed differently from a single loan. |
| Other entries on your file | Payday loan history is assessed alongside everything else, not on its own. |
| Mortgage payment history | A clean, consistent mortgage record is often the strongest counterbalance. |
| Loan to value and equity | More equity can widen the choice of lenders regardless of this specific point. |
| Income and affordability | Assessed as for any remortgage, including current outgoings and stability of income. |
These are general points, not lender rules. Each lender sets and changes its own criteria.
Information an adviser may ask for
You don’t need all of this to make an enquiry. It helps to know where to find it, because an adviser is likely to ask about most of it.
- Copies of your statutory credit reports from all three agencies
- Dates and details of any payday or short-term loans you have used
- Confirmation of whether all payments were made on time
- Details of your current mortgage and its payment history
- Proof of income and your regular monthly outgoings
Frequently asked questions
Does a repaid payday loan show as a default on my credit file?
Not on its own. If every payment was made on time, there should be no default or missed payment marker specifically from the loan. It still appears as a credit account, though, showing the lender and dates.
Will every mortgage lender refuse me because of a payday loan?
No. Some lenders may view short-term, high-cost credit less favourably even when repaid, but this is not universal, and there is no single rule that applies across the market. An adviser can help identify lenders less focused on this point.
How long does a payday loan stay on my credit file?
It typically follows the same pattern as other credit accounts, generally recorded for 6 years from when it was settled or closed. Checking your own report is the only way to see exactly what is showing and for how long.
Does using a payday loan a long time ago still matter?
It tends to matter less the longer ago it was, particularly if you have not used one since and your other credit has been managed well in the meantime.
Is it better to avoid payday loans altogether before remortgaging?
If your remortgage is approaching, it is generally sensible to avoid taking on new short-term, high-cost credit, since a recent loan can be viewed less favourably by some lenders than an older, settled one.