When it comes to car finance, your Credit Score (or credit rating) is pretty important. Not only will it affect your eligibility for certain Types Of Finances Agreements, but also how much you pay. However, if you’re new to finance, your credit score may be an alien concept.

But fear not. In this guide we explain all there is to know about credit scores including - what they are, how they work, and most importantly - how your credit rating can help you get the best possible car finance deal.

What is a credit score?

Your credit score is a rating given to you by different companies that assesses your financial history.

The score is provided in a different way depending on the company, but normally it is a numerical score from 0 to 850, with 850 being the best.

In essence, your credit score boils down to a rating of your creditworthiness – how much of a risk would it be for a financial provider to lend you money.

Your rating can be one of 5 options - Excellent, Good, Fair, Poor or Bad. But what do these categories actually mean?

Understanding your credit score


  • Excellent
    The best possible credit rating you can achieve. Your credit history is spotless, and you have a record of taking out finance packages and repaying them in the past.
  • Good
    There are no black marks on your Credit File and you have not been in trouble previously. Perhaps you are new to finance and haven’t taken out a product before.
  • Fair (or average)
    No major black marks on your file, but a few minor issues. Maybe you missed a few payments once or twice, or you’ve been regularly using your overdraft.
  • Poor
    Your credit history is weak. You may have suffered a major credit problem in the past and are now taking steps to rectify them, but still in the early stages.
  • Bad
    You have had serious issues in the past with meeting payments, or entered financial difficulties and had to declare bankruptcies. These may not have been your fault, but unfortunately the credit companies won’t see it that way.

How to check what your credit score

To access your credit score, you’ll need to request a copy of your credit report from either of the 3 main credit reference agencies:

Each has their own scoring criteria, so you may find your score varies between the different credit reference agencies. To get the most accurate rating, its best to request a report from each of the above.

Before you can access your report, you’ll likely be quizzed on a few personal details to confirm your identity. This could include your address history, employment details, banking details or questions relating to your financial history.

Make sure you read the small print

When you use a company to check your credit score and they provide it for free, make sure you take a look at the terms and conditions. Many free credit rating websites are only after one thing – your data.

If they know that you are looking at your credit score, then they can reasonably guess that you are looking to take out some sort of finance agreement. They can use this knowledge to sell to credit card companies, loan providers, and even car finance companies.

If you don’t want to be bombarded with sales messages, make sure you check what you are signing up for and what communications you have opted-in to.

Making a car finance application

Now you know your credit rating, you can think about Applying for Car Finance. Don’t worry if your credit rating is lower than expected, as there are plenty of finance providers that offer Bad Credit Car Finance, and have packages specifically tailored to individuals with low credit ratings.

Improving your credit score


Whilst you may still be eligible for car finance with a Poor or Bad credit rating, it’s worth noting your credit score will impact the interest rate charged and the amount you can borrow.

Fortunately, there’s plenty of action you can take to repair your credit score – so you can access the best rates for future finance applications.

For information on how you can start to repair and improve your credit rating, visit How To Improve Your Credit Score – And Maintain It. Hear you will find much more information on what your credit rating means, what can negatively affect your file, and how you can take steps to improve it.

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