What credit score is needed for car finance?
Whether you rely on a car for commuting, errands, or weekend getaways, car finance is key for many drivers to get on the road. And one of the major approval criteria for car finance is your credit score.
But, if your score is lacking, we could help. You don’t always need a perfect credit score to finance a car. Here’s a guide on how your credit score impacts car finance, the other factors involved and what you can do to try and boost your chances of approval.
Car finance credit scores: what you need to know
A credit score isn’t the only thing that can influence a lender’s decision, but it could make a big difference in whether you’re approved or not. So, what credit score do you need to finance a car? And what can you do to improve yours if it needs some work? We’ve covered everything you need to know.
What is a credit score?
Your credit score is one of the things that lenders use to find out what kind of borrower you are. It’s a three-digit number that represents your borrowing history and how likely it is that you’d be able to manage your loan repayments.
There’s no ideal car finance credit score, or magic number to hit. But generally, the higher your credit score, the better, and the more likely it is you’ll be able to get a loan.
How your credit score affects car finance
Your credit score influences the terms and interest rates you're offered for car finance. Higher credit scores could mean lower interest rates and more favourable loan terms.
On the flip side, if you have a poor credit score, you may be seen as a higher risk to lenders, and you could face higher interest rates, larger deposits, and stricter loan terms.
If yours is poor, try not to worry. Some lenders, including ones we work with, specialise in bad credit car finance and may be able to offer financing options if you have a lower credit score.
Whether you’ve had a CCJ or haven’t been able to build up a good credit history yet, they could be able to help. Credit is subject to status.
Which credit score models do lenders use?
The UK has three credit reference agencies (CRAs) – Experian, Equifax, and TransUnion – and each one calculates your credit score differently using different information.
The ideal credit score needed for car finance varies by each CRA. Each uses its own scale, so a number that’s considered a fair score at one agency could be good or excellent by another.
At Car Finance 247, we work with a wide panel of lenders who use different credit reference agencies to determine whether they can approve you in principle. As you can’t be certain which of the three agencies your lender uses, you might want to check your credit score at all three.
What credit score do you need to finance a car?
In the UK, each credit reference agency may provide you with a different credit score to the other. Credit scores can range from 0 to 999, with higher scores indicating better creditworthiness.
A credit score below 560, for example, might be considered poor or bad, depending on the credit reference agency you use. Individuals with bad credit may face difficulties getting as good a deal on their car finance, because they’re seen as more risky to lend to.
Let’s look at this in more detail.
What’s the minimum credit score to finance a car?
Because lenders use a variety of credit scoring models, there isn't a definitive highest or lowest credit score for car finance. But, people with poor credit scores (below 438) may find it challenging to get car finance from traditional lenders. Credit scores can vary between credit reference agencies. A customer rated ‘Poor’ by one CRA may be rated differently by another. This is because each agency uses its own scoring system and may hold different data.
With our simple car finance calculator, you can get a good idea of what sort of deal you’ll be eligible for and make a decision from there.
Car finance credit score ranges and how they affect your chances
There is no universally required credit score to finance a car. Each lender uses different criteria when assessing applications. Generally, a higher credit score could improve your chances of securing better interest rates and loan terms.
Credit score ratings can vary depending on the credit reference agency and scoring model used. There are three main credit reference agencies in the UK. Here is an example from Experian, to give their representation of credit score ratings:
Credit Score Range |
Credit Rating |
Description |
961 to 999 |
Excellent |
People with a credit rating above 961 might get the best deals because they’re seen as safe borrowers, but there are no guarantees. |
881 to 960 |
Good |
Lenders may think people in this range are okay at handling money. They're seen as decent borrowers, so they could get loans without too much trouble, but maybe not the very best deals. |
721 to 880 |
Fair |
People in this group might have a harder time getting loans. Lenders may see them as riskier borrowers, so they might be offered credit with some limitations. |
561 to 720 |
Poor |
Some lenders may consider an application for finance, but it might be difficult to be approved. If you're in this group, you may need to work on improving your credit or work with lenders specialising in bad credit. |
0 to 560 |
Very Poor |
You’re more likely to be refused most credit cards, loans and mortgages. If you're in this group, you may need to work on improving your credit or work with lenders specialising in bad credit. |
Reference: Experian®
Remember, the credit score needed for car finance can vary slightly depending on the specific scoring model used by lenders.
If yours is poor, try not to worry. Some lenders, including ones we work with, specialise in bad credit car finance and may be able to offer financing options if you have a lower credit score. Credit is subject to status.
How to boost your chances of getting approved
Even if you have a poor credit score, you may still be eligible for car finance. And there are some things you could do to boost your chances of approval.
Strategies to improve your credit score for car finance
Boosting your credit score takes time and consistency, but small steps can make a big difference. Here’s what you could do:
Pay your bills on time – This is one of the biggest factors in your credit score. Even one missed payment could have a negative impact.
Keep your credit card balances low – Ideally, try not to use a high percentage of your available credit. It shows lenders you’re not over-reliant on borrowing.
Don’t open lots of new accounts at once – Too many credit applications that require a hard check in a short space of time might be a red flag and could lower your score temporarily.
Check your credit report regularly – Make sure all the information is accurate. If you spot any errors, get them corrected as soon as possible.
Things like registering to vote can also be an easy way to boost your score. Head to our guide on how to boost your credit score for all our expert tips on this topic.
Other factors lenders look at
It’s not just about having a good credit score for car finance, so try not to worry if yours needs some work. When looking at your loan application, lenders consider various factors besides credit scores too, which may include:
Income and debt-to-income ratio – Lenders want to know that you can afford your monthly payments. They’ll look at how much you earn and compare it to how much debt you already have. If most of your income is regularly going towards existing credit, it might affect your chances.
Income stability – Having a steady income or consistent employment could help you get approved. If you’ve recently changed jobs, some lenders might want to see proof of your new income over a few months.
Deposit amount – Putting down a deposit upfront can strengthen your application. It means you’re borrowing less and the lender may see you as less of a risk, especially if your credit history isn’t perfect.
The car you’re financing – The type of car you choose could also make a difference. Newer cars with lower mileage are often seen as more reliable and easier to resell, which makes lenders more confident in offering you finance.
Ultimately, lenders want to see that you can manage money well and keep up with monthly payments, so anything you can do to show you’re financially reliable can go a long way.
How to apply without hurting your credit score
It might be good idea to shop around when you’re looking for car finance. Most full applications involve a hard credit check, and if lenders see too many of these in a short space of time, it can lower your credit score and make you look like more of a risk.
To avoid this, you could start by using soft search tools. These give you a good idea of whether you’ll be approved and what kind of deal you might get without affecting your credit score.
When you apply for a no-obligation quote with us, we first carry out a soft search. If you choose to proceed a lender will carry out a hard search on your credit history which could affect your credit score.
And, if you do get declined for car finance, it may be worth reviewing your credit score to see if there’s anything you can improve before trying again.
Disclaimer: Car Finance 247 Limited is a credit broker, not a lender. Credit is subject to status and affordability. We cannot guarantee approval for car finance. No financial advice is given. Please read all terms and conditions carefully before applying.