Credit score for car finance
Do you know how a car finance company decide if to lend to you or not? Your credit score is what they use to help assess the risk of lending to you
Why is your credit rating so important?
Your credit score will follow you for a lifetime including when you want to:
- Open a bank account.
- Get a credit card.
- Buy a car on finance.
- Take out a mortgage on a house.
What is a credit score?
Your credit score is an assessment by a Credit Reference Agency of how good or bad a credit risk you are.
For example, Equifax uses a scale from 0 to 900 points to determine if you have a good or bad credit rating.
- 475 – 900 Points – Excellent
- 400 – 474 Points – Good
- 350 – 399 Points – Fair
- 300 – 349 Points – Poor
- 0 – 299 Points – Very Poor
How to find out your credit score
You can find out your Equifax Credit Rating FREE (This is on a 30-day trial using a credit or debit card so don’t forget to cancel in time if you want to avoid paying).
What does a good credit score tell the lender?
You have a history of:
- Repaying your loans, bills and credit cards on time.
The better your Credit Rating, the lower the perceived risk you are of making the loan repayments.
A good credit score should get you a better interest rate and terms on your car finance deal.
When should you check your credit report?
Before you apply for car finance or any other type of loan, first check your credit report.
Also, check it from time to time to be sure you’re aware of anything going on such as missed payments or errors.
You may check your credit report as often as you want with no effect to your credit score.
Who looks at your credit rating?
When you apply for car finance or any other type of credit, the Lender with permission will check your credit report.
You will also have to supply the following personal details before they can make a decision:
- Your current address (You need to be on the Electoral Roll).
- Twelve-month employment history.
- Monthly income & disposable income.
What’s in your credit report?
Your credit report will contain the following details:
- Your name your and DOB.
- Your current and previous addresses.
- If you are on the Electoral Register.
- Details of your current account provider, but only overdraft details.
- f you share Joint Account
- All your credit accounts such as the bank, credit cards, store cards, other credit agreements and utility accounts.
- Missed and late payments remain on your report for six years as well as CCJ’s (Decrees for Scotland) or IVA’s and if declared bankrupt.
The credit report excludes such information as your salary or any criminal record.