MoneyPayday lender Wonga has apologised after sending emails implying that one of its loans could "do wonders" for people's credit ratings.

Consumer help website MoneySavingExpert (MSE) warned that the presence of payday loans on people's credit files can cause some lenders to turn people down flat.


It was contacted by an MSE user who received such an email from Wonga last month, which read: "Repaying your Wonga loan on time does wonders for your credit rating!"

Wonga.com apologised for any confusion caused and said that an old version of a customer email had been temporarily used. The lender declined to say how many of the emails were sent but said they were no longer in use.

A good credit history is vital when applying for loans, credit cards or mortgages and lenders generally have toughened their borrowing criteria amid the weak economy, meaning people have higher hurdles to jump to get a deal.

MoneySavingExpert.com money analyst Helen Saxon warned on the consumer website: "Far from benefiting your credit rating, payday loans can actually have the opposite effect. Even if they're fully paid off, their presence on your credit file can cause other lenders to turn you down flat, as it could be a sign you can't manage your money."

But Wonga highlighted information from consumer credit information firm Callcredit, which is used by Wonga, which said that in some cases, payday loans can help to improve people's profiles.

Peter Mansfield, managing director of Callcredit said: "In some cases, if used responsibly, payday loans could help to improve the credit profile, especially those with either little credit history or those with a previous history of missed payments and arrears."

Earlier this week the trading watchdog announced it has launched formal investigations into several unnamed payday lenders over the use of "aggressive debt collection" methods as part of a crackdown on the sector.

The Office of Fair Trading (OFT), which is carrying out a compliance review into the industry, is also writing to all 240 lenders in the market to outline its concerns about poor practices in the sector.