Credit Scores and Car Finance – Everything you need to know

What is a credit score?

A credit score is a three-digit number that represents your creditworthiness. It is based on information from your credit report, which is a record of your credit activity. The higher your credit score, the more likely you are to be approved for credit and to qualify for favourable interest rates and terms.

How does your credit score affect your ability to obtain car finance?

Your credit score is one of the factors that lenders consider when deciding whether to approve you for a car loan. A good credit score can improve your chances of getting approved for a loan and may also help you get a better interest rate on the loan.

What steps can a user take to improve their credit score?

Here are some steps you can take to improve your credit score:

1. Pay your bills on time: Late or missed payments can have a negative impact on your credit score.
2. Keep your credit card balances low: High balances can indicate to lenders that you are overextended and may have difficulty repaying a loan.
3. Use credit responsibly: Don’t apply for too many new credit cards at once, and avoid using all of your available credit.
4. Check your credit report for errors: Errors on your credit report can lower your credit score. You can request a free copy of your credit report from each of the three major credit bureaus (Experian, TransUnion, and Equifax) once per year.
5. Consider a credit-builder loan: This type of loan is designed to help you build credit. You borrow a small amount of money and make regular payments to repay the loan. This can help you establish a positive credit history.

What are the benefits of improving your credit score?

Once you improve your credit score, you may be able to qualify for credit cards and loans with better interest rates and terms. This can save you money on interest and make it easier for you to afford the things you want or need, such as a car or a home.

It is still possible to get Car Finance with a bad credit rating?

It is possible to get car finance with a bad credit score, although the terms of the deal may be less favourable. Lenders who offer car loans to people with bad credit may charge higher interest rates to compensate for the increased risk. However, options are still available to you.

Motorly is a Bad Credit Car Finance Specialist who can help you can the deal you need to get your next car.