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Do Title Loans Go Against Or Help Your Credit Score

You may consider a car title loan if you have bad credit but need money quickly. Although you can get a title loan quickly, you may wonder if title loans go on your credit report. Below, we answer that question and help you understand the implications of borrowing money against your vehicle.

Do title loan issuers report timely monthly payments to the credit bureaus? Or do they only report missed payments or loan defaults that lead to a repossession? What becomes of your credit score if you default on the required payments? Read on to find out the answers to these questions!


Do Car Title Loans Go on Your Credit?

Yes, but only if your lender reports your on time payments to any of the three main credit bureaus. It’s optional for any lender to report your payments to the bureaus, so you should always ask them beforehand what their policy is.

If you own your car, taking out a title loan is tempting when you need money to fund an unexpectedly significant expense. There are many benefits to car title loans.

Your imperfect credit will not typically jeopardize approval since you put up your car for collateral. However, that’s not the only consideration in making a final decision.


When Do Title Loans Go on Your Credit Report?

Lenders have different policies regarding reporting your car title loan to credit bureaus.

If you find a company that reports your monthly payments, you should view that as positive when choosing between lenders. Another common question is if title lending services will even check your credit score in the first place. Car title loans are based on the value of your car, and you put your vehicle up for collateral. So, why would the lender need to check your credit?

It’s possible to find lenders that won’t check your FICO score. However, not all lenders give you this option.


A man paying his bills on time each month.


I Don’t Have A Credit History. Can I Still Get a Title Loan?

In most cases, you’ll have trouble qualifying for a loan if you have no credit history. Personal loan companies want to know you can make payments on time, and unsecured lenders are cautious about offering loans to customers with no payment history. However, that’s not always the case with a title loan. Since these loans depend more on your vehicle’s equity than your FICO score, there’s a chance you can still be approved for a title loan solely based on your collateral.


How Do Title Loans Affect Your Credit?

People always ask, “Do title loans go on your credit when you pay on time?” The answer to this is yes! Most secured lenders report your monthly payment history to the credit bureaus just like you would expect with a credit card or home equity loan. Any company reviewing your credit history will see your on-time payments as positive. However, the same is true if you fall behind or miss payments on any secured or unsecured loan! Make timely payments to improve your FICO score and avoid taking out a title loan!


How Does Your Credit Score Work?

By understanding how your credit score works, you can learn how to rebuild your credit history and eventually rebuild your credit score. The following factors are significant components of your credit score:

  • Your payment history accounts for approximately 60% of your credit score.
  • Credit usage or utilization accounts for 30% of your credit score.
  • New credit and credit mix also impact your score by 10% each. However, having too many new credit inquiries can negatively impact your score.
  • Missing a payment or having your vehicle repossessed by a title loan company can significantly impact your FICO score.


How Can a Title Loan Build Or Lower Your Credit Score?

Failing to pay on a title loan or pink slip loan can result in a default, negatively affecting your score. But did you know that title loans can also rebuild your credit? Title loan lenders are much like banks and installment loan companies; they all report your payments to the credit bureaus. Make your monthly payments on time, and you’ll build your credit history over the life of the loan! Check the Premier lending requirements before you apply with us and make your monthly title loan payments on time to improve your FICO score.