What Is a Bad Credit Score for Car Finance?
When you’re looking for a new car and worried about your credit, the question is usually: will a bad credit score stop me getting approved? The short answer is no, but it does affect your options and the terms you’ll be offered.
Here’s what you need to know about bad credit car finance.
What Counts as a Bad Credit Score?
There’s no single definition of a bad credit score in the UK. The three main credit reference agencies (Experian, Equifax, and TransUnion) use different scoring systems:
Experian – Score out of 999. Generally considered poor below around 560-600.
Equifax – Score out of 1,000. Generally considered poor below around 420-500.
TransUnion – Score out of 710. Generally considered poor below around 566.
Because different lenders pull from different agencies, a bad credit score on one report might look different on another. What matters is how your score compares to each individual lender’s risk threshold.
The key point: a bad credit score means you’re seen as statistically higher risk, but it doesn’t automatically disqualify you.
How Lenders View Bad Credit in Car Finance
When you apply for car finance, lenders assess the risk of you missing your monthly payments. A low credit score increases that perceived risk, which typically results in:
- Higher interest rates to compensate for the risk
- A requirement for a larger deposit
- Fewer lenders willing to approve you due to your credit rating
But credit score is only part of the picture. Lenders also consider:
- Your income and whether you can realistically afford the repayments
- Your employment history and job stability
- Your existing debts and financial commitments
- How many other credit applications you’ve made recently
Someone with a poor credit history but stable income and solid employment history might have better chances than someone with a marginally higher score but shaky finances.
It’s also worth knowing that many brokers, including Motorly, use soft credit searches initially. These don’t leave a mark on your credit file, so you can explore your options without damaging your score further.
Can You Get Car Finance with a Bad Credit Score?
Yes, it’s possible to get a car finance agreement, though your options may be more limited.
Several factors can work in your favour:
Specialist lenders – Some lenders specialise in bad credit car finance and subprime lending, specifically designed for customers with imperfect credit file.
Using a broker – A credit broker with access to a wide panel of lenders can match you with lenders more likely to approve bad credit car finance applications.
A larger deposit – Putting down more money upfront reduces the lender’s risk and improves your approval chances.
Shorter loan term – A shorter repayment period is less risky for the lender, which can offset the impact of your bad credit score.
Strong finances otherwise – Good income, low existing debt, and stable employment help significantly.
A poor credit score creates barriers, but it’s not impossible to get approved.
Improve Your Chances Before Applying for Car Finance
Before you submit an application to get a car loan, take these steps:
Check your credit reports – Look for errors or outdated information from the three credit agencies and dispute anything incorrect.
Get on the electoral roll – Being registered to vote helps your credit profile.
Pay bills on time – Even small payments on store cards or utilities improve your payment history.
Pay down existing debt – Reducing your credit utilisation ratio can boost your score.
Avoid multiple applications – Applying to many lenders in a short period signals financial desperation to other lenders.
Save for a deposit – Even a few hundred pounds shows commitment and reduces the lender’s risk.
Making a few improvements can shift you from very high risk to moderate risk, opening doors to better lenders and terms.
Bad Credit Car Finance FAQs
Can I get car finance with a 400 credit score?
It’s possible, though you’ll face limited lender options and higher interest rates. You may need a larger deposit or a guarantor.
What’s the lowest credit score for car finance?
There’s no fixed minimum. Different lenders have different thresholds. Some may approve even very poor scores if other factors are favorable.
Is a bad credit score the same as no credit history?
No, but both are challenging. No credit history means lenders can’t see your payment behavior, which can be just as risky as a poor payment record.
Will applying for car finance hurt my credit score?
A soft search won’t. But a hard search (formal lender assessment) leaves a mark on your file. Using brokers who start with soft searches is the smart approach.
Do specialist bad credit lenders charge more?
Usually yes. Higher interest rates reflect the increased risk, but it’s often the only viable option if mainstream lenders decline you.
Getting Bad Credit Car Finance
Having a poor credit score makes car finance harder, but not impossible. The key is being strategic: build trust with lenders through deposits and financial stability, and work with brokers who understand bad credit lending.
To explore your options and see real offers for bad credit car finance, visit Motorly’s Bad Credit Car Finance guide.