At Coulter Credit, one of the many questions we hear people ask is: “Do title loans affect your credit?” The answer is simple but also not as straightforward as you might think. Title loans, like any loan, are a debt you must repay in a timely manner. The consequences of failure to pay can negatively impact your life beyond even your credit score. Read more to learn about responsibly taking on title loans and maintaining your good credit.
How Can a Title Loan Affect Your Credit?
Title loans are often last-resort options for those in need of fast cash. While these options can be a lifesaver for those in need, they are also very costly. The lender will hold on to your vehicle title for the duration of the loan. Title loan lenders do not usually check credit; in fact, many offer this service to people with little or no credit as one of the few reliable methods of receiving a loan. Not every state will allow this, so check your state’s regulations to be sure.
As an alternative to expensive title loans, Coulter Credit recommends that you take steps to improve your credit. Credit repair services can help you rebuild your credit and improve your finances for more long-term solutions.
The flip side to the low barrier for entry is that title lenders will not report your payments to any credit bureaus. Unfortunately, a title loan can’t help you improve your credit scores, making it more challenging to acquire loans from traditional lenders. We suggest you always seek credit-oriented loans wherever possible, even if you have to start small.
The Hidden Costs of Title Loans
What happens if you default on a title loan? Because title lenders hold on to your vehicle’s title, they typically will not turn over the case to collection, but will instead repossess the vehicle. This may leave you in a worse situation than where you began, which is another reason we recommend against title loans in favor of traditional loans.
Does a title loan repo affect your credit? Not usually. Typically, the lender sells the vehicle without reporting the debt, but this still leaves you without a car or a credit increase to show for it.
Title Loan Alternatives
Coulter Credit has helped thousands of clients with bad credit or no credit. Our experts can show you precisely what you need to do to start building your credit again. Repair services can help with disputes or predatory reports. As well, we recommend these alternatives as more effective methods of restoring your credit:
Personal loans are a simple first step to better credit. Many lenders specialize in helping bad-credit cases. You may not always receive the amount you want right away, but your improved credit scores will pave the way to your success over time.
If you aren’t sure what to do when title loans affect your credit score, try borrowing money from friends or family with a solid payment plan. Individuals like these are more inclined to help you no matter your credit score. However, when you borrow from friends or family, we encourage you only to borrow small amounts until you can pay them back consistently. It’s never a good idea to risk ruining a close friendship or family relationship if you struggle to pay back the money you borrow.
Many credit card offers specifically work for people with poor credit who need help boosting their score. Consider these credit card offers, prepare to make small monthly payments, and pay them off on time every month. If you manage these small steps, you can slowly build a good credit score.
What’s the easiest thing to do if title loans affect your credit score? Call in the experts for advice! Coulter Credit has seen thousands of cases like yours. We want you to keep your car and credit aspirations. Contact us today! Our team can help you find alternatives to avoid expensive title loans.