It makes sense to want to know what credit score is needed before applying for a loan or car financing but the truth is that most lenders look at more than just the credit score when making a decision. Learn more about what credit score is needed to buy a car in the UK:
What Credit Score is Needed to Buy a Car in the UK?
There is no minimum credit score that you need to have to buy a car. Unfortunately, there isn’t a straightforward answer to this question. All 3 agencies in the UK use different scores but you have better chances of getting car finance with a credit score in the ‘good’ category. This ranges between 881-960 for Experian, 531-670 for Equifax* and 604-627 for TransUnion.
A good credit score will also play a major factor in helping you obtain lower interest rates for car financing. This is not to say that you will not be able to get car finance with fair, poor and even bad credit depending where you apply. Other lending options do exist to help with that.
*note: your Equifax credit score recently changed – learn more here.
Can I get Car Financing with Poor Credit?
Yes, there are many different ways to get car financing even if you have poor credit. Even though most lenders will want to run a credit and affordability check during the application process – there are many that will still accept poor credit and provide financing. One option for getting a car loan with bad credit is to use a credit broker service to connect you with the right lenders. Brokers typically perform a ‘soft credit check’ to look at your current income, outgoings, and existing credit with the intent of finding the right lenders for your financial situation. A soft credit check does not negatively impact your credit score and a broker does not provide loans, but rather helps you find the right lender.
What Else is Considered in Car Financing Applications?
While having a good credit score is certainly helpful during the application process for getting a car loan, it’s not the only factor. Lenders take a look at the entire financial picture on applications and take into account positive financial changes such as current income, payment history, proof of residence, and existing credit when making their decisions. Car lenders also look at what type of car and the costs associated with purchasing when deciding whether to approve or deny a loan. Certain negative marks on your credit score such as county court judgments (CCJs), individual voluntary arrangements (IVAs) or bankruptcies can make it more challenging. If you have resolved a CCJ or IVA you can add a notice of correction to your credit file which lenders will be able to read.
What are Credit Reference Agencies?
A credit reference agency (CRA) is an independent organisation that collects and stores financial data about you for the purpose of helping lenders decide whether you should be approved for loans like credit cards, auto loans or mortgages. Each CRA has its own numerical scale that they use to assign you a credit score, which tells lending institutions how financially responsible you have been in the past. CRAs might be also referred to as Credit Rating Agencies or Credit Bureaus. A CRA does not provide loans or money, they only provide financial data aimed at helping lenders make a decision.
Is There a Way to Boost My Credit Score to Get Better Car Financing?
Yes! There are many different ways to boost your credit score to get better car financing. Portify helps hard workers like you increase their credit score by reporting membership payments and positive behaviour to Credit Reference Agencies. Our community of 100,000+ members have seen their scores improve by up to 100 points in just three months.