What Credit Score Do I Need to Get Car Finance in the UK?

For many drivers, car finance is a great option to buy a new car.

However, before you can finance your next car lenders will perform a credit check.

Your score can impact your application. So, what credit score do you need to get car finance in the UK and how does it affect your application?

We look at the link between getting car finance and your credit rating. 

What is a Credit Score and How Does It Affect Car Finance?

A credit score is a number given to you in relation to your creditworthiness. It's based on your credit report from the three primary credit agencies: Equifax, Experian, and TransUnion.

They consider factors like your credit-to-debt ratio, if you make repayments on time, and how well you manage your credit.

What Credit Score Do You Need to Get Approved for Car Finance?

No minimum or average credit score is needed to apply for car finance in the UK. So, it is possible to get car finance with a low score.

However your credit score will affect several factors of your finance agreement. 

The higher your score, the better the interest rates you can get. So, while a poor credit score doesn't stop you from applying for car finance, it can impact the type of deal you are offered. 

The Importance of a Good Credit Score for Car Finance Approval

Having a good credit score UK can steer you straight into the fast lane of car finance approval.

When lenders see you've got a great score, they recognise you as someone who's been responsible with money in the past.

This means they're often more willing to offer you better deals, including lower interest rates. The better the score, the sweeter the deal.

A lower score, meanwhile, might make lenders hesitant to lend you the cash. It's not that they're shutting the door on you, but they may offer terms that reflect their caution. This includes higher interest rates.

The good news is everyone has the chance to improve their credit score. 

Tips to Improve Your Credit Score for Better Car Finance Options

There are many ways you can improve your credit score and get access to better interest rates. These include:

  • Ensuring that you're on the electoral register
  • Checking your report for errors
  • Having a good credit-to-debt ratio
  • Making payments on time
  • Not applying for too much credit at once

Being on the electoral register is a simple yet effective step to boost your credit score. It helps lenders easily confirm your identity and address.

It’s also wise to regularly check your credit report for any potential mistakes; catching and fixing them can give your score a helpful boost.

Balancing your credit-to-debt ratio will also help. A good balance between what you owe, and your available credit limit, will make you look more responsible to lenders.

Making payments on time is fundamental for a good credit score. It's like a consistent track record that shows lenders you're dependable and in control of your finances.

Lastly, avoid making too many credit applications at once. If a lender sees that you've made multiple finance applications, they will assume you're having money problems and decline the application.  

How Interest Rates are Determined Based on Credit Scores

Credit scores and interest rates go hand in hand when it comes to car finance.

Think of your credit score as your financial reputation. The higher the score, the better you look in the eyes of lenders.

When you have a good score, lenders see you as a reliable borrower, and tend to offer a loan with a lower interest rate.

However, if your score is on the lower side, lenders might be a little more cautious.

It's not that they won't lend you money, but they might offer a slightly higher interest rate to balance out the risk they're taking. It's their way of being cautious in case things don't go as planned.

By understanding this relationship between your credit score and interest rates, you can work towards improving your score. This will help you potentially secure a better rate when you're ready for a new car.

Learn more about credit scores and car finance:


FAQs About What Credit Score You Need to Get Car Finance

Can I Get Approved for Car Finance with a Low Credit Score?

Yes, you can get approved for car finance with a low credit score. However, it might come with higher interest rates, or require a larger down payment.

What Credit Score Do You Need to Get Approved for Car Finance?

There's no set credit score for car finance approval as it varies by lender. However, a higher score generally increases your chances of securing better terms and interest rates.

Do Credit Card Usage and Repayment Affect My Credit Score?

Yes, how you use and repay your credit card directly impacts your credit score. Timely payments boost it, while late payments can damage your score.

Will Multiple Car Finance Applications Affect My Credit Rating?

Multiple car finance applications in a short time can negatively affect your credit rating. Each application typically involves a "hard" credit check that can lower your score.

At Carmoola, you can check your eligibility before applying. This means we’ll carry out a soft search that won’t harm your credit rating.

A hard search will only be carried out when an application is made.