Your credit can play an important role in your life. Having good credit can make it easier to finance a car or buy a new home, for example. Your credit score can also impact how much you pay for utilities, insurance, and other expenses. For these reasons, it’s crucial that you think about how your financial decisions will affect your credit.
If you’re thinking about applying for a discount title loan, for instance, you might wonder how this decision will impact your credit. Here’s what you need to know:
Can You Get a Discount Title Loan With Bad Credit?
If you want to take out a traditional personal loan, you typically have to meet a minimum credit score requirement established by the lender. Fortunately, title loans are not traditional personal loans, so the eligibility requirements are not the same.
The title loan company will perform a credit check when you submit your application. This allows your lender to evaluate your creditworthiness when determining if you are eligible for a title loan. However, your credit isn’t the only factor that your lender will consider when making this decision. Your lender will also consider the value of your vehicle and your ability to repay, among other things.
Because your credit isn’t the only factor that determines your eligibility, you don’t need a perfect credit score to qualify for a title loan. Title loan companies typically accept most credit types.
Do Title Loan Companies Report to the Credit Bureaus?
A credit bureau is an organization that collects your credit information and makes it available to lenders upon request. The three major credit bureaus are Experian, Equifax, and TransUnion.
Title loan companies report your information to these credit bureaus. In other words, if you take out a title loan, it will have an impact on your credit score.
How Discount Title Loans Could Impact Your Credit
The credit bureaus take a number of factors into consideration when calculating your credit score. Here’s how taking out a title loan could impact each of these factors–and your overall score:
- Payment History
- Credit History Length
- Credit Mix
- Hard Inquiries
Your payment history has the biggest impact on your overall credit score. In fact, it accounts for 35% of your score. This means if you miss a loan payment or make a late payment, it could have a significant impact on your credit score.
If you take out a title loan, the title loan company will report your payment information to the credit bureaus. The credit bureaus will know whether you are making regular payments and if so, whether they are on time.
Because payment history has such a big impact on your score, making consistent, on-time payments on your title loan could help you improve your score. The opposite is also true, though. Missing even a single payment could negatively affect your score. This is why it’s so important to only borrow what you can afford to repay. You should also make sure you know when your payments are due so you don’t accidentally miss a due date and hurt your credit score.
Credit History Length
The average age of your credit accounts is another factor that impacts your credit score. The longer the average age of your credit accounts, the better. Having accounts that have been open for a long time indicates that you are capable of managing your debts. This factor accounts for 15% of your total score.
If you take out a title loan, you are technically opening a new credit account. As a result, the average age of your credit accounts will go down, which could hurt your score. However, it won’t have a huge impact since this factor only accounts for 15% of your score.
Your credit mix is another factor that credit bureaus consider when calculating your credit score. The term “credit mix” refers to the diversity of your credit accounts. This factor accounts for 10% of your credit score.
There are two main types of credit accounts: revolving and installment credit. Revolving credit accounts don’t have a set balance or specific end date. An example of a revolving account is a credit card.
Installment credit, on the other hand, has a set balance and end date. Some examples of installment accounts include mortgages, student loans, and of course, title loans.
The more diverse your credit accounts, the higher your score. Ideally, you should have a healthy balance of both revolving and installment accounts.
The impact of a title loan on your credit mix will depend on your current credit portfolio. For example, if taking out a title loan increases the diversity of your accounts, your score may slightly increase.
Every time you apply for a new line of credit, your lender will perform a credit check. This credit check appears as a hard inquiry on your credit report. Too many hard inquiries–especially within a short period of time–can negatively impact your score. This is because it indicates that you are struggling financially and need to open new lines of credit for extra cash.
If you take out a title loan, a new hard inquiry will appear on your credit report, which could cause your score to slightly drop. However, this factor only accounts for 10% of your total score, so it won’t have a huge impact.
The Bottom Line: Will A Discount Title Loan Help or Hurt Your Credit?
Taking out any type of new loan, including a title loan, could initially cause your score to drop. However, you shouldn’t let this stop you from taking out a title loan. In the long run, a title loan could actually help you improve your credit score. All you need to do is make on-time payments on your title loan. By doing this, you could see a significant improvement in your score over the course of your loan.
How to Apply for a Discount Title Loan
If you’re ready to get fast cash, follow these steps to apply for a discount title loan from I Need Cash Now:
- Contact us. Speak to a loan specialist directly by calling 1-855-713-6522. You can also submit your information using the form on our website. If you choose this option, a loan specialist will get in touch with you shortly.
- Request a free quote. You can get a free quote from your loan specialist in a matter of minutes. Your quote will tell you if you are approved for a title loan and if so, how much you can borrow. But first, you will need to provide some basic information about your vehicle, including its make, model, year, mileage, and condition.
- Finish your application submission. If you’re satisfied with your quote, finalize your loan by signing and submitting the required documentation. Your loan specialist will help you with this step to ensure you know what needs to be signed and submitted.
- Collect your cash. You can collect your cash shortly after your application is approved. You can choose how you want to get your cash: in person or via check or wire transfer.
You’re just a few steps away from getting the cash you need to make ends meet. Start your discount title loan application today.