For a lot of Ohio consumers struggling with bad credit, payday loans have seemed like a necessary evil. Not being able to qualify for a “regular” loan, these consumers can get payday loans to cover emergency expenses, but the convenience of these “easy” loans comes with a big price tag. Consumers who take out payday loans in Arizona are often forced to pay 600-700% interest rates. The heavy financial burden of these loans can lead to a vicious cycle for consumers. One payday loan just leads to the need for another one, etc. It’s also common for consumers to default on payday loans, making their bad credit even worse. Positive payment activity on payday loans isn’t reported to the credit bureaus, so these loans do nothing to improve consumer credit score

Worried that payday loans were overtaxing Ohio citizens with credit issues, several groups have stepped in and created a better way for consumers to borrow necessary funds.

How a New Borrowing Program in Ohio May Help Bad Credit Borrowers Escape the Payday Loan Cycle

Aware of the payday loan crisis, the Ohio legislation would revise Ohio’s lending laws. If this legislation is passed, three things will happen:

  • Monthly loan payments would be limited to 5% of the borrower’s gross income.
  • For larger loans, payments will be spread out over longer periods of time.
  • An interest rate cap of 28% would be strictly enforced with all loans, including payday loans.

This legislation would be helpful to consumers, but another recent effort has even more potential to be a game changer for credit challenged consumers in Ohio. Several Toledo groups including LISC Toledo, United Way of Greater Toledo, Lucas County Family, and Children First Council have created an alternative to payday lending.

In collaboration with Lucas County Commissioner Pete Gerken, these groups have introduced the Employer Sponsored Small Dollar Loan (ESSDL). Employers who wish to offer ESSDLs to members of their staff are partnered with Toledo-area credit unions. Employees of participating businesses may take out loans in the amount of $300-$1,500 at interest rates under 17%. Payments on ESSDLs are then taken directly from an employee’s paycheck over the course of six to 12 months.

The best part is that ESSDLs and all payments associated with the loans are reported to the major credit bureaus. This is definitely a silver lining for Ohio residents with bad credit and limited funds who stumble into an unexpected expense. No one likes to borrow money to cover the cost of an emergency, but it’s a little easier to deal with when the loan comes with a credit building opportunity.

Another Way for Ohio Consumers to Repair Low Credit Scores

ESSDLs seem like a good alternative to payday loans, but, so far, they’re only available through a handful of employers in Toledo. So if you have bad credit, your best bet is to start improving your credit score before an emergency expense forces you to rely on an expensive payday loan.

One of the easiest ways to give your credit score a boost is to look for errors on your credit reports and have these errors removed. Credit report inaccuracies are much more common than you might expect, and many of these mistakes can damage credit scores. Think about it. Your credit score may be a lot lower than it should be, but you’ll never know unless you check your credit reports.

If you have checked your credit reports from TransUnion, Experian, and Equifax (available at no charge every twelve months through and discovered errors that are hurting your credit score, you don’t have to deal with it alone. Ohio consumers can get a FREE credit repair lawyer to assist them with the disputing process when they contact Credit Repair Lawyers of America.

The Free and Legal way to Get Better Credit

Don’t let identity theft or errors on your credit reports bring your credit score down. At Credit Repair Lawyers of America, we’ve been cleaning up credit reports for consumers since 2008 for free. How do we do it? The law allows us to collect our fees and costs from the defendants in any successful action.  This is why our clients pay nothing for the work we do.

Let’s start the conversation about what we can do for your credit. Set up your free consultation today by calling Attorney Gary Nitzkin at (888)293-2882 or sending him a message through our contact page.

Ohio Organizations are Offering Bad Credit Borrowers a Credit Building Alternative