Why Do So Many Americans Have Poor Credit?

Last updated on October 14th, 2023 at 12:20 am

Hello,

My name is Randy and I work for the fine folks at Ready Payday Loans.  We get a lot of questions from our readers regarding payday loans.  The questions we get come from people with god credit, okay credit, and poor credit.  However, the vast majority of questions come from people with poor credit.

Why Do Americans Have Poor Credit?

There are several reasons why many Americans have poor credit. One of the main reasons is the lack of financial education and literacy. 

Many Americans do not understand how credit works and how to manage their debt, leading to missed payments and defaulting on loans. Another reason is the ease of access to credit. Credit cards and other forms of borrowing are readily available, which can lead to over-borrowing and financial difficulties. 

Additionally, economic factors such as unemployment and underemployment can also contribute to poor credit, as people may struggle to make ends meet and make payments on time. Finally, some Americans may have poor credit due to unexpected life events such as medical emergencies or divorce which can cause unexpected financial hardship.

How Do Americans Repair Their Poor Credit Scores?

There are several steps that Americans can take to repair their bad credit scores:

Check your credit report: 

Obtain a copy of your credit report from the three major credit reporting agencies (Experian, TransUnion, and Equifax) and check for errors or inaccuracies. If you find any, dispute them with the credit bureau.

Pay your bills on time: 

Late payments are one of the biggest factors that negatively impact your credit score. Make sure to pay all your bills on time, every time.

Reduce your debt: 

High levels of debt can significantly lower your credit score. Try to pay off as much debt as possible, and avoid taking on new debt.

Keep old credit accounts open: 

The length of your credit history is a factor in your credit score, so try to keep your old credit accounts open, as long as you are not incurring fees or interest charges.

Be selective about new credit: 

Only apply for new credit when you need it and be selective about the credit offers you accept, as each application can lower your credit score.

Seek professional help: 

If your credit score is severely damaged and you are unable to repair it on your own, you may want to consider working with a credit counseling agency or a credit repair company.

It’s important to note that repairing credit takes time, and there is no quick fix. Consistently following the above steps and being patient will increase the chances of repairing your credit score.

Payday Loans Industry Defined

The payday loan industry offers short-term, high-interest loans to individuals who need cash quickly. These loans are typically for small amounts, such as a few hundred dollars, and are meant to be paid back within a few weeks, usually on the borrower’s next payday. Payday lenders usually require borrowers to provide proof of income, a checking account, and a government-issued ID, and the loan is secured by a postdated check or electronic access to the borrower’s bank account.

Does the Payday Loan Industry Help or Hurt People?

The payday loan industry can be controversial, with some arguing that it helps people in need of fast cash, while others argue that it harms them.

On one hand, payday loans can be helpful for people who have unexpected expenses and need cash quickly. They may not have access to traditional forms of credit, such as credit cards or personal loans, and may not be able to get a loan from a bank. Payday loans can provide them with the cash they need to pay bills or cover unexpected expenses.

On the other hand, payday advance loans can be harmful because of their high interest rates and fees. These loans often have annual percentage rates (APRs) that are much higher than traditional loans, which means that borrowers end up paying a lot more in interest and fees. 

Additionally, many borrowers are unable to pay off the loan on their next payday and are forced to roll over the loan, incurring additional interest and fees. This can lead to a cycle of debt that is difficult to escape from.

Many states have laws that regulate payday loans and cap the interest rates and fees that lenders can charge, but these regulations vary widely. Payday loan industry is also heavily criticized for targeting vulnerable populations and trapping them in debt.

Final Thoughts On The Payday Loan Industry And Poor Credit Scores

In conclusion, payday loans can be helpful for people who need cash quickly, but the high interest rates and fees can make them harmful for borrowers. It’s important for individuals to weigh the pros and cons of taking out a payday loan and consider all their options before making a decision.

If you have any questions about payday loans, we are here to help.  Just reach out to us at any time with your question and we will get back to you.  

Until next time!

-Randy