Credit rating to buy a car

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 and will be used 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. These are correct as at March 2016.

  • 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 repayments on the loan.

With a good credit score, you should be offered a better interest rate and terms on your car finance deal.

Can I get car finance with a bad credit history?

Yes! Check how to get a car loan with a Poor credit history but you may have to pay a higher APR.

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 (Needs to be on the Electrol Role).
  • Age.
  • 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 date of birth.
  • Your current and previous addresses.
  • That you are on the Electoral Role
  • Details of your current account provider, but only overdraft details.
  • Details of anyone you have taken out a joint account with.
  • 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.

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.

Checking your credit report as often as you like will not affect your credit score.

Useful links – Credit rating to buy a car

How to check your credit report!
Credit reports online

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