Learn how your credit history and credit score affect your ability to get a Kansas City car title loan.
One of the most common misconceptions about Kansas City car title loans is that they are difficult for consumers with bad credit. Unlike loans from a traditional lender, title loans are based on the equity in the borrower’s vehicle. This means consumers can qualify for a title loan regardless of credit score and credit history. In fact, most title lenders do not run an applicant’s credit at all.
This doesn’t mean consumers should assume their credit score is unimportant — quite the opposite. Lenders use credit scores to determine whether someone qualifies for a loan and what interest rate they will receive. Consumers with a low credit score or no credit history are usually stuck with higher interest rates and limited options.
Waldo Financial, a Kansas City car title loan provider, encourages consumers to understand how they can improve their credit score to better qualify for loans and get the lowest interest rate possible. The following are important tips for consumers considering any type of loan, including a title loan.
Co-Signing on Loans Comes with Consequences
There are many factors that go into a consumer’s credit score, including payment history, total debt amount, length of credit history, credit inquiries, and types of credit. This means that having a diverse credit history with different types of credit (such as car loans, student loans, and a mortgage) shows a consumer is capable of managing many types of loans.
Some consumers make the mistake of co-signing on loans for other people to diversify their credit mix and improve their credit score. While this may work, it can also backfire if the other person defaults on their loan. In this case, the co-signers credit report with be hit with late payments and their score will go down.
Personal Information is Irrelevant
Many consumers erroneously assume that their personal information, such as their age or gender, is a factor in their credit score. The truth is that these personal details are not taken into account at all. Instead, factors like age of credit history, types of credit, whether there are missed payments or derogatory information, or high credit card balances are taken into consideration.
It’s Possible to Improve a Credit Score
Finally, Waldo Financial encourages consumers to take action to improve their credit score in any way possible as a better credit score translates into easier loan qualification and better rates. There are many ways to improve a credit score, including paying off credit card balances, making payments on time, not using all available credit, and avoiding applying for too much new credit at once.