To put it simply, there is no exact credit score for car finance. 

While a good score will certainly help to improve your chances, there is a range of different criteria that lenders will consider. This includes your employment status, your income, and your ability to afford the loan. Most importantly, they want to ensure that the monthly loan payments won’t put you in financial strain. 

So, there’s no magic number that you need to get your application approved. 

Something to keep in mind: If you are applying for car finance with bad credit, you may face a few more hurdles. 

At We Finance Any Car, we offer simple solutions for a variety of financial situations. Submit a quick application to check whether you’re eligible – this won’t have an impact on your score. 

Alternatively, reach out to our team today to get some more information.  

Is there an ideal credit score for car finance?

One of the most common questions that our team gets asked is: ‘What credit score do you need for car finance’. Annoyingly, there isn’t a single answer. 

Different lenders will have different requirements when reviewing your application and there is no set minimum credit score. However, there are various categories that your score will fall into. A ‘good’ score tends to be more favourable than a ‘bad’ score. 

This will give lenders an understanding of your creditworthiness. In other words, how likely you are to repay them. 

To make things a little complicated, there are three main credit reference agencies (Experian, Trans Union, and Equifax) in the UK, each with its own scoring systems. This means it can be difficult to give a definitive answer.

However, the factors that influence your score remain the same, such as your payment history, credit utilisation, and any recent credit inquiries. 

The below table should give you a rough idea of which category you are in:

What is a credit score and why does it matter?

Your credit score is a three-digit number that you can find on your report. Essentially, it indicates how responsible you are with credit and whether you have met payment deadlines in the past. 

In theory, the higher the score, the more reliable you are with borrowing money. 

To lenders, it helps them determine the level of risk involved with your application. If you are considered a higher risk, there can be a few outcomes:

• Your application may be turned down
• You may be limited in your choice of finance types
• You may receive higher interest rates

Remember, your credit score is just one factor that lenders will consider. It’s also not set in stone and there are ways that you can improve it over time, such as meeting payment deadlines and reducing any outstanding debt.

The main takeaway is that you don’t necessarily need a perfect score to be eligible for financing a car. You could have a high credit rating but a low income, meaning you’re still a risk to the lender. On the flip side, you could have a low rating but are financially stable. 

Don’t let your credit score prevent you from applying!

What affects your credit score?

From failing to make on-time payments to issues arising from divorce, many people face financial challenges. Unfortunately, your credit score will be affected as a result.

Here are a few factors that can impact your score:

• Reaching your credit limit or being overreliant on credit
• Entering into an Individual Voluntary Agreement 
• Having a limited or no credit history
• Defaulting on a loan
• Undergoing a hard credit search
• Submitting multiple credit applications
• Managing your overdraft poorly
• Receiving a County Court Judgement

Lenders will have access to this information when assessing your eligibility and you may struggle to secure an agreement. But it’s by no means impossible!

At We Finance Any Car, we work with an extensive panel of lenders and offer a range of car finance solutions. This means that you can still secure a finance deal, regardless of your circumstances.  

Why it’s important to check your credit score

It can be easy to neglect your credit report. For some, it might not be a priority. For others, it may be something that’s never been thought about. But, just like your account balance, it’s important to check it regularly. 

There are a few reasons for this:

1. Understanding your finances: This will help you to manage your money more effectively and make informed decisions.
2. Keeping track of your credit: It takes time to build a good credit history, so it’s important to keep a close eye on your score.
3. Spotting any errors: Any inaccurate information in your report can negatively affect your rating and potentially your ability to apply for finance.
4. Reacting to changes: Unexpected life events can cause your credit score to drop. The quicker you spot this change, the quicker it is to recover your score.

Ultimately, having a good understanding of your credit report will enable you to apply for finance with confidence. It will also help you determine which type of finance plan to go for – whether that’s through a mainstream lender or a more specialist option. 

You can view your credit score through any of the major credit reference agencies. It’s easy and will only take a few minutes!

The connection between credit scores and interest rates

As well as affecting your eligibility, credit scores can also influence the interest rates you receive. This is the extra amount you will pay on top of your loan. 

For a good credit rating:

Although it’s not guaranteed, applicants with a good or perfect score tend to receive lower interest rates. The loan will therefore be more affordable, making car finance an accessible option. 

For a bad credit rating:

Car finance for a bad credit score will look slightly different, usually with less flexible terms and higher interest rates. This is to offset the increased risk associated with applicants who have a history of credit difficulties. 

We recognise that higher interest rates can be problematic, especially if you’re already struggling with your finances. In this instance, it’s worth choosing a lender who specialises in bad credit. They have a wealth of experience in this area and may be able to offer a more tailored solution. 

Keen to finance your next car? 

Whether you have a specific car in mind or are at the beginning of your buying journey, you’re in the right place! Enjoy a quick process, end-to-end support from finance experts, and an agreement that suits your situation.

Still unsure? Have a look at our bad credit solutions to learn more about how we can help.

Can’t wait to get behind the wheel? Apply now with We Finance Any Car.