Do Title Loans Go on Your Credit?
Individuals in the market for a car title loan often have concerns about their credit score and report. Most of the time, borrowers apply for car title loans because of their credit.
Car title loans work a little differently than loans that are more conventional. It is important for potential borrowers to understand not only why they are applying for a car title loan, but also what they expect the loan to do for them.
Because car title loans are reported on an individual’s credit report, it’s crucial for potential borrowers to understand how these will function before moving forward.
Why Get a Car Title Loan?
Car title loans are an effective way to get cash quickly.
Car title loans are a means to obtain cash for emergencies and other unexpected events. Regardless of what the event is, these loans can put the needed money in your hands quickly. However, car title loans come with a price.
As a potential borrower, you should thoroughly research the responsibilities that come with a car title loan. It is recommended to do extensive research and even talk with potential lenders before making your decision.
Do Title Loans Affect Your Credit?
Yes, it does affect one’s credit. To understand why car title loans affect the borrower’s credit, you have to understand the nature of these loans. Car title loans are the same as all types of loans. Lenders rely on the borrower’s credit history and his current income to determine his ability to repay the loan.
Hard Credit Check
Every hard credit pull will decrease your score between one to five points. While five points may not seem like a lot, it can take a fair score down to a poor score, which could hurt your ability to apply for a loan in the future. Hard credit check takeaways include:
• Occurs when a borrower applies for a loan
• Displays the borrower’s entire credit history
• Decreases the credit score
• Stays on the credit report for two years
Soft Credit Check
Soft credit checks do not affect personal credit scores and will not need an approval from the borrower. These typically appear when a person or creditor verifies the borrower’s credit as part of a pre-approval or background check. Soft credit check takeaways include:
• Used to verify borrower for pre-approvals
• Does not display the borrower’s entire credit history
• Will not affect credit score or stay on credit report
• Not visible to other creditors
Title Loan Credit Hits
Like any other loan, car title loans are recorded on an individual’s report. As such, the responsibility demanded by these loans needs to be taken seriously. They are a marker of your financial health.
The handling of repaying a car title loan is a serious matter. Keeping up payments is essential. Delinquent or late payments are not only are recorded on your credit report, but also can result in a car repossession.
Similarly, the successful completion of the loan is recorded as a positive mark on your credit report. However, it does not have the same impact as completing a home loan.
As with any loan, research is required. Individuals in the market for a car title loan should carefully consider their options, as well as their monthly budget. Car title loans should not be rushed or entered into lightly. A good and reputable lender will make sure you understand this before applying for a car title loan.