What credit score do you need to get a car on finance?

Credit scores are really important when it comes to getting any sort of loan or finance. Lenders can use your previous credit history to assess your ability to pay your future loans on time and in full. Missed or late repayments in the past can lead to a bad credit score and increases the risk to lenders as you’re more likely to default on future loans too. Lenders can categorize credit through the credit scale, ranging from bad to excellent and your score will determine where you fall on the scale. The guide below looks at the minimum credit score needed for car finance and how you can increase your chance of approval. 

What credit score do you need for a car? 

Unfortunately, there is no set credit score you need to get approved for finance. There are 3 leading credit reference agencies in the UK who each have their own individual scoring system so it would be unfair to say you need a credit score of “X” in order to get an approval. What one lender may class as ‘bad’ credit another may view as ‘fair’ credit so it can be hard to pinpoint a recommended credit score. No matter what your current situation is, it’s always better to have the best possible credit score you can before you start making applications. 

Can you get an approval with low credit? 

Having a bad credit score can hold you back when it comes to financing a car. Some lenders may refuse you upon application as they don’t think you will be able to meet the repayment deadlines. There are specialist lenders who can help people with poor credit to get a finance deal, but they usually offer higher interest rates, making finance more expensive. Your credit score also affects the interest rate offered and usually the best rates are reserved for those with better credit scores. It can be a good idea to improve your credit score before you start applying to see easier acceptances and also get you a low APR car finance deal

5 easy ways to improve your score before a car loan application: 

Whilst it’s worth remembering that car finance can never be guaranteed, there are a few easy ways in which you can improve your credit in the run up to a finance application to help put yourself in a better credit position. 

  1. Stick to soft search applications. 

When you apply for finance with a hard search credit check your credit score can be affected and it will be recorded on your report. Multiple hard checks with different lenders in a short space of time will negatively impact your credit. It’s a good idea to shop around for finance though to get the best deal. So where possible, you should try to use a soft credit check for car finance instead to help protect your score during the process. 

  1. Make payments on time. 

One of the easiest ways to prove your credit worthiness is by making payments on time and in full for a few months before you start applying. Making new financial habits like keeping on top of repayments can help to increase your credit score and show future lenders that you can be responsible for handing credit correctly. 

  1. Clear any existing debt you have.

If you currently have high levels of debt, it can be negatively impacting your credit score. It can be a good idea to clear any existing debt you owe before taking on any more finance or credit. Not only can reducing your debt help your credit score but it can also make any future finance deals more affordable as you won’t be paying of debt anymore. 

  1. Keep your credit usage low. 

Your credit score takes into account how much of your available credit you’re using. High levels of debt can affect your score but if you want to maximise your credit, you should try to only use around 50% of your available credit limit. If you really want to boost your score, you should always stay below 30% of your credit limit and make payments on time and in full to clear it. 

  1. Build a credit history. 

Many people assume that having no credit is a good thing, but lenders can’t determine which type of borrower you will be if you if you’ve never had any evidence of credit. In this instance, you could consider bulging a small credit history first to prove that you can handle your finances responsibly. This can be as simple as getting a mobile phone contract in your name and setting up a direct debt to meet the deadline each month.



Alex is the co-author of 100 Greatest Plays, 100 Greatest Cricketers, 100 Greatest Films and 100 Greatest Moments. He has written for a wide variety of publications including The Observer, The Sunday Times, The Daily Mail, The Guardian and The Telegraph.

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