Bad Credit Loans That Help

It's not easy when you need a loan but you have a bad credit score. You'll have a much more difficult time qualifying for loans, and even if you do qualify, many lenders will give you poor loan terms because of your credit. Fortunately, there are bad credit loans that help.

The worst thing about bad credit is that it has a huge effect on your life, and in some cases, it may not even be due to any bad decisions or missteps on your part. You could have a bad credit score simply because you haven't worked on building yours up yet, because no credit is just as bad as bad credit.

From bad credit loans that help when you need fast cash to how you can improve a bad credit score, this guide has you covered.

Car Title Loans Are Bad Credit Loans that Help in Times of Need

When you apply for a traditional loan, the lender will look at how much money you make and your credit score. They use both of those factors in deciding whether to approve your loan application, and your credit score helps them figure out the interest rate they'll offer you, should they approve your application.

This means a bad credit score can automatically disqualify you from getting many types of loans. Car title loans are different, though.

The regulations on title loans depend quite a bit on the state where the loan is being issued, but title loans are similar enough from state to state to provide a general overview of how they work.

A vehicle title loan relies on the borrower's car. The lender will evaluate the car to see what it's worth, and then decide whether to approve the loan based on that. The amount of the loan will also depend on the car's value. There are typically only three items a borrower needs to obtain a title loan:

  • A car
  • The car title, which must be in their name and free of any liens
  • A form of government-issued ID to verify that they're at least 18 years old, the minimum age for a borrower as set by the federal government

In most states, lenders don't need to ask about the borrower's income. Some states either require the lender to ask for income information or require income verification, such as pay stubs or banking statements. Texas doesn't require this.

Here's the best part – there's never a credit check involved to get a title loan. A bad credit score won't matter, because this type of loan only depends on your car. And the application process is very fast. You could end up getting a Houston title loan the same day that you've applied for it. Here's how:

  1. You go to a title loan company's office and fill out an application.
  2. The title loan company inspects your car to determine its value and set the loan amount.
  3. You get your loan when you've given the title loan company your car title.

You keep your car throughout the title loan term. The lender has your car title, but that's only until you've repaid your loan. As far as the loan money is concerned, that's yours to spend however you want, making these bad credit loans that help with any expense.

What to Do About Bad Credit

A vehicle title loan can be a huge help in a time of need, but it's still smart to improve your credit score, as this will make life much easier for you in the future. There are a few great ways to dramatically boost your credit.

First and foremost is paying all your bills on time. Ensure that you're always making at least your minimum payments by the due date, because payment history is the most important factor when it comes to your credit score. If you're having trouble with this, just set up auto pay on all your bills.

Next is keeping your credit utilization low, because this is the second most significant factor in your credit score. Your credit utilization is simply how much of your lines of credit you use at any one time. Let's say that you have three credit cards, and their combined credit limits are $15,000. You have balances adding up to $7,500. That would put your credit utilization at 50 percent, which isn't good.

It's recommended that you keep your credit utilization below 30 percent at all times. Lower is always better, and if you can keep your credit utilization below 10 or 20 percent, you'll be in great shape.

Your credit history is another factor that credit reporting agencies use to calculate your credit score. It's not as significant as the first two, but it's still important. Credit history depends on how long you've had your credit accounts open. This means that it's best to avoid closing credit cards if you can avoid it, especially credit cards that you've had for a long time. If a card has an annual fee, see if you can downgrade it instead of closing it, as this ensures that you don't lose the account history. It's also bad to close credit cards because that reduces your available credit, which can push your credit utilization higher.

Final Thoughts

If you have bad credit, the best thing you can do for yourself is start adopting responsible financial habits. This means saving money every month, putting money aside for an emergency fund and reducing spending as much as possible.

Of course, you can't choose when an emergency strikes, and you may end up with a hefty bill to pay when you're not entirely prepared. That's where a car title loan could come in handy. You can get a quick financial boost and pay off your most pressing expenses, even if you don't currently have a great credit score.