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:
Pay your bills on time: Late or missed payments can have a negative impact on your credit score.
Keep your credit card balances low: High balances can indicate to lenders that you are overextended and may have difficulty repaying a loan.
Use credit responsibly: Don’t apply for too many new credit cards at once, and avoid using all of your available credit.
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.
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.
Understanding what you can afford is an important step when applying for car finance, especially for those with a bad credit history.
If you have made an application for finance in the last couple of years, it’s likely that you’ve heard of affordability. It’s likely that you were asked a few questions about your affordability status or even went through an affordability check.
Affordability has become a buzzword in the car finance industry over the last few years, and it’s all a part of being a responsible lender. By getting a better understanding of your income and outgoings, lenders are able to get a better picture of what you really can afford to borrow.
How does affordability work?
When taking out car finance, lenders will look at your income and outgoings to see how much disposable income you have. Simply put, the more disposable income you have, the more likely that you’ll be able to afford your car finance payments.
What type of car can I afford?
Taking out a car finance loan to pay for your new car is a big financial commitment that will run for several years. So, the affordability checks done by lenders protect you from taking out finance you cannot afford. You don’t want the car repayments to push you into debt or make it harder for you to pay your bills. This is especially true for those with a bad credit history or who has struggled with their financial commitments in the past.
When considering how much you can afford to spend on a car, it’s important to consider all the extra costs and charges. It’s more than just the car payments. You have to factor in the insurance, fuel costs, road tax and the maintenance and upkeep of your vehicle. Depending on what car you choose, these costs can be higher than the monthly car payments.
At Motorly, we recommend that before deciding which car to buy, you set up a budget of what you can afford. All you need to do is to work out exactly how much your essential bills are per month. By doing so, you can work out what your disposable income is. Ideally, you want to have some flexibility in your budget to cover unexpected bills or a change in your personal circumstances. The more flexibility you have in your budget, the more likely it is that you will be approved.
By doing this before you start shopping for cars, you increase the chance that you will pass the affordability checks.
How Motorly can Help
If you are in the market for a new car, Motorly can assist you every step of the way. Our sales team have a wealth of experience and can help you to avoid any pitfalls and get behind the wheel of a new car.
Even if you have struggled to find the finance you need in the past, Motorly is the Bad Credit Car Finance specialist and can help you find a car finance solution that suits you. By working out your affordability first, you can make sure that you don’t fall in love with a car that is outside your budget.
Check out our handy Car Finance Calculator below to get an idea of what you can afford.
How to check and improve your credit score
What is a credit score?
A credit score, sometimes referred to as a credit rating, is a number given to you to show how good you are at repaying debts and keeping up with your bills. The bigger the score you have, the more confident lenders will be to offer you finance. A higher score can help you get accepted for finance and at better rates.
Your individual score is calculated using a variety of factors, including your borrowing history, your current borrowing and other information about yourself including your income.
How can I check my Credit Score?
Motorly has partnered with Experian, who can offer you a free credit check today.
By checking your credit report, you can keep on top of your financial position and know where you stand when you apply for credit.
How can I improve my credit score?
Register on the electoral roll: Adding your name to the electoral roll is one of the easiest ways to improve your score.
Make sure you pay your bills on time: Too many missed payments will quickly damage your credit score. By keeping up with your payments, you are showing potential lenders that you are reliable when paying your debts.
Check your credit report for fraudulent activity: If you see something that is wrong, such as a credit application that you didn’t make, you could be the victim of identity fraud. By regularly checking your credit report, you can keep on top of any issues.
Can I still get car finance if I have a bad credit rating?
Motorly has a panel of lenders that cater to those whose credit scores are not perfect. If you have bad credit, and you are looking to buy a new car, or if other lenders have rejected your application, Motorly may still be able to help you
Even though having a poor credit rating may limit the options available to you, the great news is that it’s still possible to get a car finance application accepted with a fair to poor credit rating.
Motorly has a panel of lenders that cater to those whose credit scores are not perfect. If you have bad credit, and you are looking to buy a new car, or if other lenders have rejected your application, Motorly may still be able to help you get a car finance deal that is right for you. Motorly are specialists in helping customers with bad credit rating to get car finance.
When you’re scouring the market for car finance, you’ll often find your credit report mentioned. But why is it important? The better your score, better deals will be available to you. Check yours for free with UK Credit Ratings today.
Checking your credit file allows you to easily view your credit score. This lets you see how likely you are to be accepted, when you do decide to go ahead and apply for finance. By simply registering with UK Credit Ratings for free, you can see your score with zero charge.
Seeing where your score lies lets you decide when is the right time for you to apply for car finance. You may find your credit report is excellent – great stuff! And so you’re happy to go ahead. Or your score could be poor to fair. This may lead you to wait a few weeks until you build your score back up again before applying.
Not only can you check your score for free with UK Credit Ratings, but they’ll also give you tips on how to improve it. Helping you to increase your chances of being accepted. Win win!
Don’t apply for car finance blindly. Let UK Credit Ratings help you view, increase and grow your score today. Find more tips & tricks on how to improve your chances of being approved for car finance on the motorly blog.
*Free 14 day trial. If you wish you continue using the service, the monthly subscription is only £19.95. Cancel anytime during the trial with no charge.
When applying for car finance you will often come across the terms soft search and hard search. But what do they mean? And do you know the difference? We are here to clarify this, separating fact from jargon.
what is a soft search?
A soft search checks how likely you are to be accepted for finance, without affecting your credit score. This means a search cannot be seen by lenders. Only you are able to view soft checks on your credit file. So this will not affect a lenders decision.
Think of a soft search as a preliminary check, which calculates the probability of being accepted without performing a full search on your credit report. With this in mind, consumers are able to shop around to find the best deal for them. Comforted by the fact that these searches will not be seen by financial lenders. In theory, this means it doesn’t matter how many searches you have, as they are invisible. Spooky, we know.
However, a soft check is an indication of how likely you are to be accepted for finance. Meaning, the outcome is not always guaranteed when a full hard search is then later carried out.
what is a hard search?
In contrast to a soft search, a hard search can be viewed by lenders when deciding if you are a good candidate for finance. A hard search will check your credit file and leave a mark of this check. Most hard searches will stay on your credit report for 12 months.
Here at motorly we never perform a hard search. Our partners’ only complete a soft search when checking the affordability of finance for our customers. A hard search is only ever done with an individual’s permission when you want to go ahead with a full application.
Obviously, once a complete finance application is submitted by a lender, this will incur a hard check. But at this point, the customer is happy with their proposed financial plan and are simply completing the final stage. You will now have finance in place and be ready to receive your new vehicle. This is the fun part.
apply today
Rest assured when you complete an online finance application with motorly that we only ever perform a soft check. So, whether you are looking for your next car, van, bike or caravan we can help. We are an independent broker that searches the market for you, with zero impact on your credit score. Walk into a garage with your finance approved. What are you waiting for?
Our easy to use online calculator makes this process easier than ever. Simply drag & drop the buttons up or down to suit your needs and reveal your estimated loan and repayment amounts. Fill out our quick quote form and let us find the right vehicle for you. It’s that easy.
