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How A Low Credit Score Affects Your Ability to Get Car Finance

If you’ve never taken out car finance before or you have already been refused car finance before then you may be wondering how a bad credit score can affect your chances of getting approved for finance. It is a very common car finance myth that having bad credit means that you can’t get accepted for finance. There are many options available for people with bad credit, but it can make it harder to get accepted and can increase the amount of interest you will be charged. Always keep in mind that car finance can never be guaranteed in any circumstances and you should be wary of anyone offering guaranteed car finance.  How can a low credit score affect your ability to get car finance, and can you improve your chances of getting approved?

Do lenders have to perform a credit check to get car finance?

Many people with bad credit will search for a finance deal with no credit check as they think having your credit checked can harm your credit score. The reality is that most lenders will require a credit check of some sort to help you get approved for finance. Lenders aren’t there to say no to applicants, but they do want to be assured that any money they lend out will be paid back.

Lenders perform a credit check to assess your creditworthiness. They want to know your financial history and evidence that you can be trusted to pay back any loans or finance. Lenders also check your affordability to ensure that you are not lent more money than you can afford to pay back. You can shop around for finance using soft search credit checks that don’t harm your credit score or leave a mark on your credit file.

What does bad credit card finance mean?

A recent survey from Refused Car Finance found that 60% of customers thought think that you can’t get approved for bad credit car finance. This is not true. It can be harder for people with bad credit to get approved but it’s not impossible and there are a few ways in which you can help to improve your chances. In many cases, having bad credit can mean that you will be offered a car finance deal with higher interest rates this is because you are seen as more of a risk to the finance lender.  Specialist bad credit card finance lenders can help you to get an affordable car finance deal with a car you want.

How can you increase your chances of getting a car loan with bad credit?

Use a car finance broker

Car finance brokers are a great way to help get you approved. You apply online with a car finance broker and then they match you up with a finance lender from a wide range of finance lenders and packages. You can then use your finance deal at any FCA approved car dealership across the UK.

Fix any mistakes on your credit report

You should get into the habit of checking your credit report regularly. It can be really insightful to know what is recorded on your credit file and how credit applications are recorded. If you see anything that is not acuate or up to date, you can contact your credit referencing agency who provided your credit report to fix any mistakes for you. If you have taken out a joint application for finance in the past, you may also be financially linked to them on your credit file. If you no longer have any active credit with them and they have bad credit, you should ask to have them removed from your credit file as their low score could be harming yours.

Register on the electoral roll

Being on the electoral roll doesn’t specifically help you increase your credit score, but it can help lenders to verify your details. The electoral roll lists all the people in the UK who are eligible to vote and records their living address. It can speed up the approval process as lenders can quickly verify your address.

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