How Auto Title Loans Affect My Credit Score?
You might be wondering, “Will an auto title loan affect my credit score?” The answer is yes, it can potentially impact your credit score under specific circumstances. Keep reading to learn more about credit scores, title loans, and more. And if a title loan sounds like the right fit for you, Max Cash Title Loans is here to guide you through the application process!5
What is a Credit Score?
A credit score is represented as a number between 300-850, and that number reflects how financially reliable someone is, meaning that they are more likely to pay back loans or debts. The higher your score, the greater your creditworthiness is. Having a good credit score is important as it can determine whether you can obtain loans, mortgages, or credit cards. Additionally, your credit score can determine the interest rate you will receive for a financial product. The better your credit score is, the likelier you are to receive a lower interest rate, which will save you money in the long run if you decide to get a loan.
Do I Need Good Credit to Get a Title Loan?
Typically, obtaining approval for an unsecured loan, such as a personal loan, is difficult without a strong credit score to back you up. Many lenders see individuals with bad credit as a high credit risk, so even if you do end up qualifying for a personal loan, your interest rate could be incredibly high.
Title loans can often cater to many Americans from all different kinds of credit and financial backgrounds because they are secured loans! With a secured loan, you are required to pledge an asset as collateral for the loan, so the application process can be much more flexible. Even if you aren’t confident with your credit history, you could potentially apply for a title loan!5
Does a Car Title Loan Go On My Credit?
It depends. Some title lenders don’t report your payment behavior to any of the major credit bureaus, including Experian and Equifax. Your payment behavior refers to how you make your payments. Are they made on time? Is your loan in good standing? The answers to those questions can impact your credit score if your lender is reporting that behavior. It is important to keep up with your loan payments and make sure that your loan stays in good standing!
Will an Auto Title Loan Hurt My Credit Score?
Like most loan options, title loans have the potential to hurt your credit score. One of the ways a title loan could affect your credit score is through loan default and repossession.
If you stop making payments and end up defaulting on your loan, you are likely violating the terms of your loan contract. Once your loan is funded, a title lender places a lien on your car’s title, and it stays there until your loan is paid off.
Therefore, as your lienholder, the title lender has the legal right to repossess your car and sell it at auction if you do not comply with the terms of your agreement and default on your loan.
Loan default and repossession can affect your credit score, so it is incredibly important to communicate any and all financial hardship with your lender.
Most title lenders want to avoid repossessions and work out a solution with you! Communication is key to potentially avoiding the worst consequences of loan default. You may be able to refinance your loan or work out another option with your lender.
How Long Does Repossession Stay On Your Credit Report?
If you aren’t already familiar with the term credit report, it refers to the detailed record of your financial history. It includes things like:
- Accounts
- Payment History
- Outstanding Debt
Although vehicle repossession is usually the last resort, it can stay on your credit report for up to 7 years.
Repossession can significantly hurt your credit score, so it is important to avoid it at all costs. If you ever have trouble repaying your loan, remember that the most important thing you can do is reach out to your lender!
They are usually more willing to work with borrowers who are proactive and communicate their financial issues before they miss a payment.
During the repayment process, if you feel like you can’t make a payment, just reach out to your lender and let them know.
You may have lost your job, or you could be experiencing financial difficulties. Regardless of your current situation, you must do your due diligence and be proactive-don’t ignore the issue!
What are The Perks of Having a Good Credit Score?
There are many perks that come with a good credit score, but it can be tough to have one without the right financial literacy! Credit scores play a crucial role in the financial world, so you should understand how they work and how they affect your life.
It is likely that a borrower with good credit will be offered a larger loan amount as well as a lower interest rate. In the world of finance, credit data plays an important role. A couple of examples of what good credit can help with are below:
- Renting an apartment
- Buying a house or a car
- Best rates on car and homeowners insurance
Whether you choose to apply for a personal loan, title loan, or credit card, it is important to understand that if you do not pay your debt obligations back, it will significantly impact the health of your credit report.
Learn More About How Title Loans Affect Your Credit Score
Managing your credit score can be overwhelming, but it is an important part of your life! Although you do not need a strong credit score to apply for a title loan, it is beneficial to have a strong credit score if you want to obtain a home, apply for certain jobs, or even get a new car.5
Now that you know more about how title loans affect your credit score, you may want to apply for one. Max Cash Title Loans can give you managing tips, guide you through the car title loan process, and make sure you get the best deal.4 5 Selecting the right people to work with is crucial if you want to get a title loan online or over the phone today! If you have any questions about your title loan, credit scores, the application process, or the effects of an auto title loan, give Max Cash Title Loans a call today at 855-561-5626! Our title loan agents are here to help. You can also click here to submit a loan inquiry and find out if you are eligible for a car title loan!5