Have you been looking at getting a car on finance recently? Perhaps you’re considering a few options, but you’re not quite sure whether you want to apply for finance yet.
Maybe something holding you back is that you’re nervous about being rejected. We get it. We’ve all been there. It’s a terrible feeling being rejected for any type of finance, but it’s important to know it’s not the end of the world. There are ways around it. However, if you have no idea what your credit score is, you may not have a clue whether you’re likely to be accepted or not.
It’s important to have a rough estimate on what your credit score would be. It doesn’t have to be in numbers, but knowing whether it’s good or bad can be really beneficial, especially when it comes to buying a car. Why? Because the cost of owning a car can drastically change, so when you’re applying for finance, you need to know you’re budgeting correctly. You may have a great credit score, but you’re applying for far too much credit. You need to be smart with your budget and make sure you can secure the car you want with the finance deals available to you.
In a survey we conducted in January 2023 with 2,000 car buyers, we discovered that 44 percent of people had no idea what their credit score was. Potentially, they were going into a financial agreement with no indication of whether or not they would be accepted for it. And rejection will only harm their score further.
What is a credit score?
Imagine a database that tracks every single financial movement you’ve ever made. It analyses and scrutinises the types of purchases you’ve made, what you’ve owned on finance, what credit cards you have, and any missed or outstanding payments you didn’t make. It weighs it all up and spits out a three digit number. This number is your credit score.
It’s important to note that there is no tipping point between having a good or bad credit score. It’s an area of grey. The better your credit score is, the more likely you are to be accepted for whatever finance you apply for. However, that doesn’t mean you will be accepted for every finance you apply for. On the other hand, having a low credit score doesn’t mean you will be rejected for everything you apply to. But it does mean that you are less likely to be accepted and if you’re going to be accepted, you don’t want to be borrowing a large amount of money.
What is a good credit score?
If you’re completely new to credit scores and finances that doesn’t mean you necessarily have a good credit score. To have a score you need to borrow in the first place. It’s not a case of starting at 999 and slowly lowering the more you borrow. But if you are completely new, you may have no idea what kind of score you have. As a general rule of thumb anything between 0-560 is considered very poor. Anything between 561 and 720 is considered to be ‘poor’ and anything above that is good. Remember though, having something below 560 doesn’t mean you won’t be able to get credit at all. You just need to find the best deals that work for you.
How you can find out your credit score
As we mentioned earlier, applying for finance and being rejected can harm your credit score. Remember that analysis we spoke about? A rejection note will stick to your credit score, showing that in the eyes of that lender, you did not meet their criteria. So, it’s best not to keep applying for car finance with varying degrees of deposit until you find an agreement that will accept you.
Fortunately, you can find out your credit score for free using a variety of websites online. Most will give you a brief overview of a variety of things. The most popular is Experian and they have a great service that can give you a lot of information about your credit score – not just three digits.
Getting a full check through Experian can help you see what is positive about your financial history and what is negative, meaning you can learn what wrongs need to be re-written. Perhaps you have been living in and out of your overdraft each month rather than getting out of it, because it’s ‘only a small amount in comparison to the large loan you’re steadily paying off’. It’s important to seek suitable financial advice but Experian is a great place to start.
It’s also possible to find out your credit score through other online credit reference agencies. There are a few but make sure they are official. Most of them will offer you to check your score for free or to sign up to a free 30-day trial (something which you can cancel later).
Looking for a new car or car finance?
If you’re looking for car finance deals or even finance on cars if you have bad credit score, contact the ChooseMyCar team. As car finance specialists, we understand how you can get car finance, even with a bad credit score.
