Getting yourself on the road in your dream car can unlock a lot of freedoms, whether that involves making your daily commute that extra bit easier or just giving yourself a bit of extra boot room for your weekly shop. However, before you hit the accelerator on car financing, it’s a good idea to understand the role your credit score plays in your eligibility. In this guide, we’ll discuss what your credit score is, how you can check it, and what impact it can have on your financing application. 

What is a Credit Score?

A credit score is an overall representation of your creditworthiness, based on the information in your credit report. It is scored by a three-digit number, which is assessed by breaking down your borrowing and repayment history including loans, credit cards, and bills such as utilities and phone contracts. 

Independent lenders and comparison sites can provide a view of your credit score, and your bank also likely has its own system for determining your credit score based on your transaction history. 

How Lenders Use Your Credit Score

Your credit score is typically used by lenders to evaluate your risk as a borrower when assessing your loan application.  

The higher your score, the lower risk you represent to lenders, as this demonstrates that you have a track record of repaying credit in full and on time.  

If you have a low credit score, or defaults on your credit report, mainstream lenders are less likely to approve you for finance or give you a good deal on interest rates. However, specialist credit experts like Ucan can often help people with poorer credit profiles get the finance they need. This means that your credit score isn’t necessarily a barrier to getting car finance. 

Minimum Credit Score for Car Finance Myth Busting

Despite what you may have been told, there is no universally accepted minimum credit score for car finance in the UK. This is because different lenders have varying risk assessments and use different credit reference agencies, meaning that your score may differ from provider to provider.  

Those who find themselves in the excellent credit category will receive the most favourable rates and contract terms. If you find yourself within the average or poor credit category, you can still find car financing options, especially with a specialist credit expert like Ucan. 

Remember that credit reports are a view of your credit history and may not fully reflect your current financial situation so the right provider for you may be inclined to accept your application regardless of your score. 

It’s worth knowing also that major banks tend to have slightly more strict processes for evaluating credit scores and lending thresholds, whereas independent lenders like Ucan can be a little more flexible and provide finance to a wider range of people – so it’s worth looking around to find a lender that matches your needs. 

In short, credit score, whilst an important factor in your application process, isn’t the be-all and end-all for securing car financing.  

Beyond the Credit Score

When lenders look at your car finance application, there are a myriad of other factors at play. Whilst your ‘credit report’ is an insightful look into your financial history, it’s important to remember that providers take a more holistic view of your overall finances to assess your potential risk. They will typically look at: 

  • Employment status: being able to demonstrate that you are employed reflects that you have a steady stream of income flowing from month to month, which shows lenders that you will be able to pay back the loan consistently. Lenders may ask to see payslips, P60 forms, or employment contracts to support this. 
  • Deposit: putting up a larger down payment demonstrates a financial commitment and reduces the overall loan amount. 

Could We Be a Match?

Your perfect car finance provider might be closer than you think. Apply today with Ucan with our easy online form and receive a simple quote in 30 seconds.