The world of credit scores and finance can be confusing to those unfamiliar with the process. If you’ve never had a credit card or taken out a loan, then your experience with credit might be limited. But there’s no need to worry. Checking your credit score has never been more simple.
Whereas a few years ago, you had to pay a company to see what your credit score looked like, now there are many companies who provide the information for free. Once you’ve had a look at your score, you might want to improve it. So a question you might ask yourself is ‘Can car finance build your credit score?’. The good news is that taking out a car finance package will help build your credit score. Here’s why.
Your credit score is assessed based on how financially responsible you are. On your score, you will have lots of different pieces of information based on your financial history. This isn’t just bad things, i.e. missed payments or defaults. It also records past finance transactions that have been successfully paid off.
So, if you take out a car finance package and are able to pay it off without any issues, you are demonstrating that you can be trusted to take out a finance package. This makes you appear less of a risk to creditors and a more attractive customer. Not only will this mean you are more likely to be successful in your application, but you will get a better deal
Your credit score is a good way to examine the health of your finances. It’s very unlikely you will be able to go through life without needing some sort of finance at some point. Everything from renting a house to spreading the cost of a luxury holiday, it all will be based on your credit score.
Having a good or excellent credit score shows that you have taken steps to manage your finances and are a reliable customer. Remember, finance companies effectively take a risk every time they lend money to someone. So if you can prove that you are not a risk, you will increase your chances of being approved and with a better deal. Some finance products and the best interest rates will only be available to those who have a good or excellent credit rating. So building your credit score will also save you money.
The first step to improving your credit score is to check your file. When you use one of the website credit check agencies, you will see what issues there are on the file. So you can look at fixing them first. This could be consolidating debt into a single manageable payment, or it could be contacting previous creditors and working to remove any mistakes on your file.
Then you should look at proving your quality as a customer. The first step is to improve traceability, so join the electoral roll as a start. Then you should look at demonstrating you can take on a finance package and repay it. Start with something small, like a new phone or piece of furniture. Paying it off on time and with no issues will improve your rating.