How Title Loans Can Repair Your CreditAuthor: Michael BookerLast Updated: October 18, 2018 If you are having credit issues, you can feel like there is no way to dig out. Once you have slipped behind on a credit card payment or two, the interest starts to pile up. Sometimes making even the minimum payment can be a challenge and will not help you pay down the balance any faster. If you miss or are late on the minimum payment, the APR can also be increased, not to mention the new fees added on. This will compound the issue and make it even more difficult to get back on track.Once your credit score drops from the default in payment, it can seem nearly impossible to find help. Traditional bank loans or a home refinance is incredibly difficult to secure. Lenders will typically only approve loans to those candidates that have a good credit score or have an average credit score but have a recent history that shows improvement. Rebuilding your credit can seem like a daunting task. It can take some time, but there are ways to improve. Title loans are an excellent option for beginning the process of building good credit habits. They are a way to help pay down some of the higher interest rate debt with a manageable monthly payment.How Does A Title Loan Work?A title loan is a secured type of loan. You use collateral, in this case, the title to your vehicle to secure the loan. Because you are using your car to secure the loan, this minimizes the risk that would be associated with a lower credit score. The lender usually won’t have to pull a credit report but will instead hold the title to your vehicle while the loan is outstanding. Once the loan is paid back in full, the title is turned back over to you. The great thing about using your vehicle is that it stays in your possession. You may continue using your car as you typically would while you are making payments on the loan. The amount of the loan you can qualify for will depend on the value of your vehicle. Once you submit the information about your car, the company will look up the value using Kelly Blue Book and determine how much they can lend.How Can This Increase My Credit Score?Often when you are having credit issues, your credit cards are carrying a balance. With an average APR of 16.85% as of April 2018, it can be nearly impossible to work those balances down or pay them off completely. By securing a title loan, you can use these funds to pay off credit card debt with a high-interest rate and consolidate that debt into one payment with a lower interest rate. Because of issues such as late payments and missed payments, a debt consolidation loan can be challenging to secure. Often those with a poor credit score cannot meet the minimums required by banks or traditional lenders. Therefore, a guaranteed loan such as a title loan can be instrumental in improving your credit score. As soon as you are funded with the title loan, pay down those credit card balances, and all your accounts are marked as current, and your credit utilization will improve. Credit utilization is a pretty significant factor in credit reporting agencies such as Experian assigning a credit score. Both are becoming current on payment status and reducing balances owed, will give an immediate increase to your credit score helping you begin and develop new healthy credit habits. You are now on the road to rebuilding your credit. How Do I Apply For A Title Loan?Applying for the title loan is easy. You can begin by filling out a brief online application. This application will help with proving identity; a credit report may be pulled depending on the amount of the loan you are looking for. Remember, the loan is not dependent on your credit score, but they may look at your current payment situation. Poor credit is not a problem since you are using your vehicle as collateral. You will also need the title to your car, usually proof of insurance. Driver’s license, current address and proof of employment. Sometimes a non-family member reference is also requested. If you are applying online, you will most likely need to submit pictures of your vehicle from all sides and the odometer. When the application process is complete, and the photos have been presented, you can drop off your title and pick up your money. Often if you are busy, some companies will even send a notary out to you to complete this process. This is where a title loan is convenient. ConclusionWith most traditional lenders, you have a lengthy approval process and can take more than 30 days for funding. With a fast application process and quick funding, you can be on the road to better credit in no time at all. You can be in and out with your new loan in as little as one hour.Congratulations on deciding to repair your credit. Paying down your high-interest debt is a significant step to working towards your financial freedom.