Are you looking for a loan to finance your project or business? If yes, you can look for various options available in the market. Well, to get a business loan or any financial option, you must have a good or excellent credit score. People find it risky to lend you money if your credit score or financial history is poor. No doubt, your fear is absolutely legitimate but having a bad credit score does not mean that you cannot get a loan. People who maintain their credit history do not face obstacles in getting financial help from credit unions or traditional lenders. It is difficult for people whose credit score is poor or less than average to get financial help from traditional lenders.
Do you know that your credit score directly impacts the probability of getting loan approval? Your eligibility for various loans, credit cards, personal loans, and mortgages is dependent entirely on your credit history. It is true that poor credit has several limitations but it is not the end of the world. You can still get a car title loan in Canada and fulfill your requirements. This also gives you an opportunity to rebuild your credit score for better loan options in the future. Here are ways to get a new loan:
- Ask your friends and family for the required money.
- Find an online lender and apply online
- Also find a co-signer and get a loan at favorable terms
- You can improve your credit score first and then apply for a loan
- You can use your asset as collateral and apply for a loan
Credit score plays a vital role when you apply for a loan from credit unions, major banks, or traditional lenders. This three-digit number reflects your creditworthiness to these financial sources.
Different Ways to Control & Improve Your Poor Credit
- Check your credit history
One of the important things to improve your credit score is to check your credit report. This activity will help you identify errors in your report. Once you find errors in it, you should rectify them immediately. As we know a credit report is calculated based on the information mentioned in the credit report, it is crucial for you to make sure that the report is error-free.
- Pay outstanding bills
If any of your credit card bills or debt is outstanding, you should pay it immediately to improve your score. Payment history is one of the important aspects which are taken into account when calculating a credit score. If your history reflects delayed payments, your score will be lower and vice versa. You should always confirm that you pay your credit bills or EMI before or on time. For this, you can activate alerts or auto-debit options. Also, one should avoid paying only the due minimum amount because this will increase your outstanding credit card balance. Always try to pay the complete bill to keep the outstanding balance low.
- Make a budget and follow it
You should know how much income is coming every month and where you are spending money. After analyzing all things you should make a budget and follow it strictly. Do not spend more money than the decided one. Try to spend less and save more.
- Credit utility
When your credit score is count, credit utilization is another essential factor which is taken into consideration. Your dependence on credit money is calculate by the amount you use versus the credit amount which was available to you. It is recommend that people must keep their credit utilization below 30%. Thus, if you have multiple credit cards, you should frequently check how much credit you are using.
- Do not remove old accounts from reports
In order to make their credit look good, most people remove old, inactive, and negative history accounts. Some even try to remove their old debts from their reports when they pay them off. It is not a good thing to do.
It is understandable that the negative things are bad for the credit score, but they are automatically removed from the report after a specific period of time. Deleting old accounts can cause a lot of damage to your score because they can have a good repayment history.
Further, if you have repaid your debts, then you must keep them in your report. This is because they will improve your credit score and also show your credibility.
- Keep your credit utilization low
Credit utilization is another major factor that accounts for 30% of the credit score. This is defined as the amount that you have utilized in comparison to the total credit available to you. You must utilize your credit below this percentage and if you are thinking of getting a car title loan in the future.
- Plan your credit
Several people whose credit scores fall quickly are those who do not plan their finances accurately. Are you thinking of applying for a lot of credit cards to increase your credit limit? Remember if you will be unable to pay bills on time for all accounts, your outstanding balance will increase and delayed payments will ultimately decrease your score.
Further, applying for unplanned loans can leave you in an extremely bad financial situation, if you’re not able to repay them. Thus, it is crucial to plan for credit and apply for a credit card/loan only if it is necessary and when you are confident that you will repay the amount borrowed.
Note that no one can improve their credit score overnight. It takes a good amount of time, patience, planning, and many other factors. Once you achieve the target i.e. improving your credit score, you should avoid making mistakes that can harm you. If you have no credit score and you are thinking that it is good, well, this is not true. Try to build your credit score and maintain it.
- Minimize hard inquiries on your credit
There are two types of inquiries: one is hard and the other is soft inquiry. A soft inquiry is defined as the process of checking your own credit score. Or when a potential employer or financial institutions (which you already trade with) check your credit history is known as soft inquiries. These inquiries have no effect on credit scores.
A hard inquiry happens when one applies for a credit card or loan. Strict inquiries after a period of time will not affect the credit score.
However, if many inquiries take place in a short time span can affect your credit score. Banks will interpret this as you need money because you have a financial problem.
- Debt Consolidation
If you have taken multiple debts, and think it can harm you, well, you can actually use them to your advantage. You can apply for a debt consolidation loan from your bank or credit union or any lending institution. They will manage your loans and you will only have to pay a single monthly installment. Remember that if your interest reduces, you can repay the loan faster.
It is understandable that getting a car title loan is not an easy job. But you can connect with reliable lending institutions such as Snap Car Cash who are operating with a mission to help people in their bad times. Now you can start working on your credit card to improve your score and enjoy various loan options in the future.