If you’ve been refused car finance in the past, had a Country Court Judgement (CCJ) or missed payments, you might be worried that your credit score will prevent you from being eligible for car finance.
If you’re thinking about applying for car finance, it’s completely normal to wonder what checks are done for car finance and how it works. This guide explains everything you need to know, including what lenders look for, and how you can improve your chances of being approved.
Do I need a credit check for car finance?
The short answer is yes, a credit check is required for car finance. All regulated lenders carry out car finance checks to make sure lending is responsible and affordable.
You may see some adverts claiming to offer car finance without checks, but in reality, legitimate lenders must carry out car finance credit checks.
Rather than avoiding checks altogether, it may be beneficial to apply through a reputable broker who works with specialist lenders that could consider a wide range of circumstances.
What checks are done for car finance in the UK?
There are two different types of car credit checks typically carried out by lenders: a soft search and a hard search.
Soft credit checks
A soft credit check (also known as a soft search) is used to assess your initial eligibility. Soft credit checks do not affect your credit score and are not visible to other lenders, but they don’t guarantee approval.
They allow lenders to review your credit history and understand how you’ve managed borrowing in the past. They’re commonly used at the start of a car finance application, so you can explore your options without committing or worrying about your credit file.
Hard credit checks
A hard credit check (or hard search) is more detailed and is carried out once you are approved in principle and decide to proceed with a finance deal.
Hard credit checks are recorded on your credit file, are visible to other lenders and may have a temporary impact on your credit score.
Lenders use hard checks to confirm information and make a final lending decision. While one hard search is unlikely to cause significant harm, multiple hard searches in a short period could be seen as a higher risk.
If you’re concerned about your credit score, it’s always worth checking whether an application starts with a soft search so you can understand your options before any hard check takes place.
Car finance checks at Car Finance 247
When you apply for car finance with us, we use a soft search to give you a quote. If you proceed, a hard search will be conducted which may impact your credit score.
If you’ve been approved in principle, your dedicated account manager will give you a call to talk you through your finance options and look to find the right deal for you.
It’s only if you find the right option and choose to go ahead that a hard search will take place.
What does a car credit check involve?
A credit check is just one of the tools that lenders use to find out a bit more about you and the way you manage your finances. It helps them see how you act as a borrower and how likely it is that you’ll keep up with your repayments.
A car finance credit check helps give lenders insight into your borrowing history, but it’s not the only thing they consider. They may also look at:
Your age
Your income
Any current financial commitments and debts
The amount you want to borrow
How long you want to take to pay it back
Not all this information can be found on your credit report. That’s why it’s important to complete your application as fully as possible.
Everyone’s circumstances are different, and each lender makes decisions based on different factors, so every application is reviewed individually.
How does a credit score affect car finance?
Your credit history doesn’t just affect whether you’re approved for a loan, it could also change the APR you’re offered. If you’ve proved that you made repayments in the past, you might find that you’re eligible for a lower rate than someone with missed payments on their credit report.
The good news is that your credit score is never fixed, and you can always take steps to try and improve it, even if you’ve got a history of missed payments or CCJs on your file.
Credit is subject to status and eligibility.
Can I get bad credit car finance?
At Car Finance 247, we understand that it may not be easy to maintain a perfect credit history. That’s why we look at each application individually to understand your personal circumstances and determine whether there are finance options that could be suitable for you.
We work with a wide panel of lenders, some of which could provide bad credit finance options for a range of people with good credit, bad credit, and somewhere-in-between credit. So, even if you’ve been refused finance in the past, or have a less than perfect credit score, we might still be able to find the right car finance option for you, subject to status. There’s no judgement here. We’ll do our best to find a bad credit car finance deal that’s right for you.
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Why use Car Finance 247 for financing a car?
We have access to lots of lenders who could offer a number of vehicle finance options, including Hire Purchase and Personal Contract Purchase. No deposit finance options could also be available – and you can buy the vehicle of your choice from any reputable dealer.
Sometimes people looking for car finance apply for several loans from different providers over a short period of time. If lots of hard credit checks are carried out, people could find it is more of a struggle to obtain finance. That’s where we come in. By working with lots of lenders, we can try and find a finance option that suits your needs.
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Will I pass a credit check for car finance?
That depends on your situation, rather than just your credit score. Lenders look at the bigger picture, including how you’ve managed credit in the past and whether the repayments would be affordable for you now.
If you’ve had missed payments or other credit issues, it doesn’t necessarily mean you’ll be declined. Lots of people get car finance after credit problems, especially if things have improved. Starting with a soft credit check lets you see what options might be available without affecting your credit score, before any hard check takes place. Credit is subject to status.
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What credit score do lenders check for a car?
There isn’t a single credit score that lenders check against. Lenders may look at your credit report and analyse your borrowing and repayment history as well as your credit score number itself. Different lenders may use information from different credit reference agencies, and each lender has its own criteria. This means there’s no universal minimum score required for car finance. Credit is subject to status.
Visit our guide on what credit score is needed for car finance for more information.
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Can I get car finance with no credit history?
There are lenders that could help customers with no credit history to get car finance. Having no credit history means lenders can’t judge how likely you are to repay any loan or finance, so this can be seen as a risk.
For that reason, people with no credit history are often perceived as having bad credit due to lack of information about how they handle finances. We have access to many lenders that specialise in bad credit car finance. Of course, we can’t guarantee approval – but we’ll try to match you up with the right type of lender who could find a finance option that suits you. Credit is subject to status and eligibility.
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How do you check your credit rating?
Checking your credit history is simple. There are many online companies that can give you access to information regarding your credit profile. Through these you can often monitor your credit rating over time, and some even provide coaching on how to improve it. It could be a good idea to check your credit history before applying for finance, even if it’s just to check that all of the information held about you is up to date and correct.