How Do Auto Title Loans Affect My Credit Score?

If you are thinking of taking out a title loan, one of the questions you might have is, “how do auto title loans affect my credit score”? An auto title loan is a way for you to use your asset as a line of credit. This type of alternative loan exists to help borrowers with no credit history or a poor credit score access financial help.

Your credit score is calculated by many different factors and understanding the nuances of your score post loan approval is crucial to your financial development. Understanding the full transparency of how a loan will affect your finances can help you make the right decision when choosing your loan option!

How Does My Credit Score Work?

Your credit score is the most important piece of financial information about you. A credit score is the numerical depiction of your worthiness as a borrower. The higher your credit score is, the less of a risk you are to a lender.

A credit score will range from 300-850, where 300 is considered bad credit and 850 is the perfect score. Understanding how your credit works is the first step to understanding how auto title loans can affect your credit score.  Each month, your credit report is subjected to your financial decisions as a borrower, and those actions will determine how your credit is affected. Each action is assigned a value, and some factors are more valuable than others when it comes to determining your score. Your credit score is determined by these factors:

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  1. Payment History: This is the largest factor that determines your credit score. Paying your debts on time and consistently shows the credit bureaus that you are a responsible borrower. Additionally, lenders will see a borrower that makes timely payments as someone trustworthy enough to lend to. Paying your debt on time and paying more than the minimum payment is crucial to having a positive payment history.
  2. Credit Utilization: If you have read your Experian credit report before, you may have seen this term come up. Credit utilization is how much of your available credit you have, and how much you are currently using. Ideally, you should use no more than 30% of your available credit! The higher your utilization is, the worse it is for your score.
  3. Credit Diversity: The types of credit you have will affect how your score is calculated. Typically, credit bureaus will want to see that you can handle multiple types of loans. Student loans, credit cards, and mortgage loans are all examples of different types of loans that will show credit diversity.
  4. Credit Length: A small part of your score is the length of your open and closed credit accounts. The more time you spend establishing yourself as a borrower, the more positively it will affect your score. Credit length shows you have experience as a borrower.
  5. Taking Out New Credit Lines: If you are opening up more than one credit line per month, it could impact your score negatively. Opening up several credit cards shows financial desperation! This is why when you are looking to buy a home or a car, you do not open up a credit card in the meantime.

If you have not done so already, check out your most recent credit report!

Three nationwide companies can give borrowers an accurate credit report:

  1. Equifax
  2. TransUnion
  3. Experian
How Can I Apply for an Auto Title Loan if My Credit Score is Bad?

If your credit score has been negatively affected, chances are you may not qualify for many traditional loan options. Bad credit is usually categorized as a credit score below 630.

While you may not be able to qualify for a personal loan, you may be able to qualify for an auto title loan even if your credit score is bad.

This is a result of how a title loan works. Title loans are collateral-based loans, which can help you bypass your low creditworthiness and get cash! While traditional loans will base your eligibility on your score, a title loan will base your eligibility on:

  1. The Value of Your Collateral
  2. Your Income and Ability to Repay the Loan

Your credit will still be considered if you apply for a title loan, but it is not the most important part of the approval process. Instead, a loan agent will look at your vehicle’s equity and your income-to-debt ratio. This ratio tells an agent what your credit utilization is, and if you can afford a loan payment each month. Even if your credit is not where it needs to be, you may still be able to get the financial help you need through a title loan.1

What are the Benefits of an Auto Title Loan?

Some of the most noteworthy benefits you can take advantage of as a ChoiceCash Title Loan borrower are:

  1. Keep Your Keys: Understandably, you want to know what happens to your vehicle during the repayment process of your loan. On-time payments can offer you more than just an improved credit score! Borrowers that are responsible for their payments can keep their keys and drive their car like its business as usual.
  2. Access Affordable Payments: With loan options like ChoiceCash Title Loans, your payments will be tailored to your income and personal financial situation. Payments start low and can get even lower!2 The more payments you make on time, the more potential you have to get rewarded with lower monthly payments.2
  3. Competitive Interest Rates: Interest rates will make or break your loan experience. The higher the interest rates, the harder your loan will be to pay back. Competitive interest rates with a loan can make your loan payments more affordable!
Where Can I Apply for an Auto Title Loan Online?

Applying for an auto title loan online can be easy! Now that you have figured out how auto title loans will affect your credit score, you can use them as a tool for good.

Get started on your title loan with ChoiceCash Title Loans today by:

  1. Filling out a Short Inquiry Form Online
  2. Send in a Few Documents about Your Car
  3. Get Your Cash and Get Approved!

If you’re ready to make the leap and take your financial stability into your hands, you can apply for an auto title loan in just a few minutes! Go online or call a representative at 855-914-2945.

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After filling your application form online, our title loan specialist can help you find the best way to pick up your cash in less than 24 hours.

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