subject: Utilize A Car Title Loan To Restore Your Credit [print this page] Your low FICO score could be due to many reasons, whether because of human or other reporting errors in your record, or poor financial management. But for subprime borrowers, repaying debt is like a vicious cycle.
Most traditional lenders refuse you a low-interest loan, so you've few options getting by other than applying for unsecured loans that charge exorbitant interest rates. One option open to subprime or high risk borrowers is to take a secured, short-term loan, such as a car title loan.
In times of emergency, it can be your only source of swift cash, with processing times as low as a few hours. So if you're in a Catch-22 situation and cannot get a low-interest loan from banks, a automobile title loan can bail you out of a tight spot.
But how do you improve your FICO score? Credit bureaus maintain a record of when you repay or default on your debts. Every time you make a payment on schedule or fail to make one, it will show on your record and be used to compute your FICO score. To improve a low score, here are some options you can think about.
Fix credit report errors. You're entitled to request a copy of your credit report free of charge each year from the three bureaus. When you do this, check through your report, or have a financial expert check through them, for human and reporting errors.
If you find any mistakes or missing entries, you should contact the credit bureaus and the lender to have them fixed. Because this process can take months or years, it is not an option for fixing your report in an emergency. Pay off your credit card debts, and some to just a small balance of below $50.
Do not apply for more loans. Every time you apply for a loan, the lender will run a credit check to assess the danger you represent. This inquiry will show up on your credit history. If you stop applying for new loans, you can prevent more inquiries showing up on your record.
Repay your loans on schedule. When you make a payment or default on one, it shows up on your report. Repaying loans on schedule as per the terms of the agreement will help you establish a positive payment history with the agencies and create a good mark on your record.
If you take a automobile title loan, it is recommended that you've a plan for repaying it and do so on time, so you can boost your low FICO score and eventually qualify for low-interest debt instruments.
A low score is not a deal-breaker with car title loan companies because they accept your vehicle title as collateral. As a subprime borrower, you should expect to pay a higher interest rate than with conventional lenders when applying for a automobile title loan.
Basically, as long as you hold clear title to your car, truck or van and the wholesale value is at least $5,000 you can get the cash you need for any urgent situation that has appeared in your life.
One of the best parts about a title loan is that you do not have to give up your car until you repay the borrowed amount, unlike traditional pawn loans. You can keep driving because the title to the vehicle and an extra set of keys serves as the collateral rather than the vehicle itself.
Even if you have bad credit you can still get approved for a title loan as long as you own your car and you have a job, as well as the required documents to satisfy the lender. Every scheduled payment is recorded by credit bureaus in terms of a FICO score, which lenders use as a reference during credit checks.
A timely payment reflects positively on your credit record and works in your favor in the long run. Hopefully this has helped explain how a title loan works. It is a fast and simple way to get the cash you need for any unexpected expenses.
