Financial advisers and bankers would say that not having any debts at all is better than having a high credit score. It is difficult, however, to go through life without ever having to borrow money.

Even wealthy people have some form of debt (read: credit card). This is because debt is necessary for people to build their credit scores.

The Pros of Debt

Your history of borrowing and repaying loans is the foundation of your credit score. Diligent and timely payments drive an individual’s credit rating up.

Stagnant credit activities, meanwhile, do not inspire confidence in an individual’s ability to pay back borrowed money on time.

Borrowing money can also give you capital gains that can help increase your net worth in the future. These are the “good debts” or loans that can help you generate extra income.

Examples of good debts are student loans, business loans, and home loans.

What’s the takeaway from these, and where do title loans come in?

Title Loans Can Pave the Way for Good Debts

You can apply for several kinds of loans when you need money urgently, but they’re likely to be high-interest, short-term loans.

A title loan is a better option. It is a short-term, secured loan for which borrowers can use their car title as collateral.

The principal can be 25 to 50 percent of the vehicle’s value, and borrowers can apply regardless of their credit score.

VIP Finance of Texas, for one, offers a fixed interest rate and annual percentage rate (APR) that’s the lowest in the industry.

So, how can title loans help improve your credit score?

Applying for a title loan gives you the chance to prove your trustworthiness as a borrower who pays dues on time.

Also, by using the borrowed money on worthwhile expenses and investments, you get to raise your income potential and avoid getting into bigger debts in the future.

High Potential for Multiple Paybacks

It is the nature of title loans to be reported back to credit bureaus. Timely loan payments will be a positive addition to your credit history.

As managing budgets and expenses to pay back title loans on time takes discipline, you also get to practice proper financial management.

You can also get long-term benefits that can lead to long-term gains, depending on how you use the loan.

Title loans paid for college tuition, real estate down payment, or rent for a commercial space or equipment could give you higher paybacks.

Recall that these are the good debts that make borrowing money worth it.

The Additional Benefit of Clear Terms

Before applying for a title loan, you must know that not all lenders offer low interest rates or are as flexible as VIP Finance of Texas.

Many title loan companies operate in states where regulations on title lending are lax or nonexistent.

As a result, their APR is higher than 300 percent, and their monthly fees can exceed $400.

A title lender with your best interests in mind won’t be after your car or bloat your monthly payments to the point of extortion.

So, stick with the company that can guarantee a fixed, 6 percent APR and low monthly fees. Not only can you get your much-needed money, but you’ll also get a head start on improving your credit score.

Apply for a title loan at VIP Finance of Texas. Follow the 3-step application on our website.