Can I get Car Finance with Poor Credit? Applying for any kind of loan when you have a poor credit rating isn’t easy. When you apply, you are usually checked with a credit reference agency, so it is near impossible to get your loan without your rating being a factor.
However, at Match Me Car Finance, we have a proven track record for finding car finance and loans for people with poor credit. We can even find lenders for people with CCJs, defaults and even IVAs, so a poor credit rating isn’t the impenetrable barrier that some lenders claim.
How do I Check my Credit Score?
Even if you have a good credit rating, we always recommend checking it before applying for any kind of finance. There are 3 Credit Reference Agencies (CRAs) in the UK:
You can request full details of your credit file, or view your score online, for free. Although keep in mind that your full credit file can only be sent to you by post and will cost money.
If you just want to check your score to see if it has recently changed, the free version is all you need, but you should see the full credit file before making any major financial decisions that will affect your score.
All 3 agencies charge for their services, but there is a way to avoid these charges by viewing your score through their partner sites:
- ClearScore (Equifax)
- MSEs Credit Club (Experian)
- Credit Karma (TransUnion)
You can also view your credit report for free from any credit reference agency that is holding your information.
What is a Good Credit Score?
Having a good credit score doesn’t guarantee that you’ll be approved for credit, loans or lower interest rates, but it can give you more options. The nationwide CRAs have different definitions of a ‘good’ score.
A good score for TransUnion is a 4 out of 5, Equifax 420 out of 700, and Experian looks for 880 out of 999.
What can Affect my Credit Score?
There are many factors that can change your rating, so viewing it regularly can save you from future surprises, both good and bad. Credit Rating Agencies update your score each month.
Here are the main things that will affect your score:
- Loans and Finance Agreements
- Repayments for Loans (Including credit cards, utility bills and student loans)
- Moving House
- New Credit Accounts
- Credit Utilisation Rate*
- Length of Credit History
- Types of Credit Account (including instalment loans, revolving debt and credit cards)
*The amount of credit you have available compared to how much you use. Using 30% or less of your total available credit is ideal.
Your credit score may also fluctuate based off of the CRA who furnished it. Lenders and creditors may report to all 3 of the nationwide CRAs, only 2, or even none. The information they use to calculate your score will differ, resulting in different scores from each. They also use different models when scoring, so even if your data is always the same, the result may vary.
Time can also be a major factor that affects your credit score. If you missed a credit card repayment a long time ago, it may stop affecting your rating, or affect it less. However, this isn’t guaranteed so it is doubly important that you keep up your repayments.
What doesn’t affect your credit score is applying for a car finance quote from Match Me Car Finance. You can freely browse all the cars and commercial vehicles that can be financed without worrying about how it will affect your score.
Other factors that don’t affect your score are: your salary, student loans, medical history, criminal record, council tax arrears and any parking or driving fines. Lenders may still request this information, and it can affect your application, just not your credit rating.
How do I Improve my Credit Score?
If you want to improve your credit rating, you have a number of options.
|What To Do||How It Works|
|Make regular payments on time||This is the simplest way to improve your score. It shows that you borrow money reliably and are responsible with your loans and credit.
|Use Less Credit||Not always an option, but if you study your payment history there may be ways to reduce your credit usage. The lower it is, the better, and under 30% is what you should aim for.
|Prove Where you Live||Registering on the electoral role using your current address, even if you live with family or in shared accommodation, will improve your score.
|Build your Credit History||Young people and people who have recently moved to the UK will have a lower score due to having less credit information to provide, and this makes anything that damages your score more impactful.
Keep your old accounts open to show as much history as possible.
|Remove Errors from your Report||Even a simple spelling mistake in your address can impact your credit score. View your full credit file and look through it carefully to find any errors.
|Check for Fraudulent Activity||If fraudsters have accessed your personal details, they may have used your credit without your knowledge. If you see any suspicious usage, get in touch with your CRA for help.
|Avoid Moving Home||If you can, avoid changing your address frequently as this will negatively affect your score; lenders may assume you have difficulty paying rent.
|Apply Carefully||Applying for credit and being rejected many times will be a red flag for lenders, and may reject you even if your score is good.
|Cut Financial Ties
|Sharing joint mortgages or credit cards with another person can affect your score if the other person’s is worse.
|Cancel Unused Credit Cards||This is a difficult decision, as having old credit cards shows more credit history, but does increase the risk of fraud. Consider other options before cancelling your cards.
If you have tried these methods, but to no avail, don’t worry! Match Me are here to help. If you apply for our free car finance quote, it will never affect your credit score.
When you find a lender that’s right for you, and the perfect vehicle for your work or personal use, you’ll have a new way to show lenders that you are a responsible borrower.
More About Car Finance
To learn more about car finance, commercial vehicle finance, or have any questions about what we do, please get in touch. You can also check out our other blog posts for more advice and finance guides. We look forward to hearing from you.