Have you failed to repay your debts on time? Made purchases you can’t afford? Maxed out your credit cards? Most of us have done one or more of these things in our lives, but there is no reason to be afraid. There are many ways to re-establish credit and get a good score so you can become financially solvent again.
Your low FICO score could be due to several reasons, whether because of human or other reporting errors in your record or poor financial management. But for subprime borrowers, repaying debt is like a vicious cycle. Most traditional lenders refuse you a low-interest loan, so you have little options than applying for unsecured loans that charge high interest rates.
One option open to subprime or high-risk borrowers is to take a secured, short-term loan, such as a car title loan. In times of emergency, it can be your only source of fast cash, with processing times as low as a few hours. Therefore, if you are in a difficult situation and you cannot get a low-interest loan from banks, a car title loan can bail you out of a tight spot.
But how do you improve your FICO score? Credit bureaus maintain a record of when you default or repay your debts. Every time you make a payment on schedule or fail to make one, it will show on your record and be used to calculate your FICO score. To improve a low score, the following are some of the things you can consider.
Pay Off All Your Credit Card Debts
Move your debts from a card or pay off all your credit card debts that will soon be maxed-out to one with a higher limit. This will help your limit your debt loan because maxed-out cards can reduce your FICO score.
Fix Credit Report Errors
You are entitled to get a copy of your credit report free of charge every year from the three bureaus. When you do this, have a financial expert check through your report for human and reporting errors. You can also check through them by yourself. If you find any missing entries or mistakes, you should contact the credit bureaus and the lender to have them fixed. Because this process can take months. It’s not an option for fixing your report in an emergency.
Repay Your Loans on Schedule
When you default or make a payment, it will show up on your report. Repaying loans on schedule as per the terms of the agreement will help you establish a good payment history with the agencies and create a good financial record.
Don’t Apply For More Loans
Every time you apply for a loan, the lender will perform a credit check to evaluate the risk you represent. This review will show up on your credit history. If you stop applying for new loans, you can stop more inquiries from showing up on your record.
If you take a car title loan, it’s recommended that you have a plan for repaying it and do that quickly. This will help you boost your low FICO score and help you qualify for low-interest debt instruments.
A low score is not a deal breaker with car title loan firms because they accept your car title as collateral. Like a subprime borrower, you must expect to pay a higher interest rate than with traditional lenders when applying for a car title loan. Car title loans is for people with no or bad credit.