Just like other kinds of borrowing, a doorstep loan can have either a positive or negative impact on your credit rating, depending on how well you manage it.
Like all loans, a doorstep loan does affect your credit score. Whether this effect is positive or negative depends on you. If you repay it in full and on time, it should make a favourable change to your credit score.
What is a credit score?
To really get to grips with credit scores, visit our guide on how they relate to short-term loans, but in brief, it’s one lenders way of telling other lenders whether you’re a good or bad payer.
Your credit report contains things like where you’ve lived and whether you’ve kept up to date with loan, mortgage and credit card payments, together with household utility bills, and helps lenders decide whether you’re likely to make repayments on any future borrowing.
How a doorstep lender handles your credit rating
Even if you started with a poor rating, you may be able to leave the lender with a better one. How? Simply by paying off all of your loan by the date you agree when you take it out. Of course, on the flip side, just like any lender, not repaying on time can harm your score and can affect you obtaining credit in the future.
Note: if you have other creditors and don’t pay them back on time then you could still damage your rating despite repaying us.
The difference between a doorstep lender and some other lenders is that a doorstep lender could lend to you even if you don’t have the best history at the moment. So, you actually get the chance to begin improving your score if you pay off your loan on time.
Repaying your loan on time and in full may actually help you get things like mainstream credit and a mortgage.
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Will a doorstep loan affect my credit score