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.
There isn’t a specific minimum credit score for car finance, but generally the higher your score, the better your chances of being approved.
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 could you do to try and improve yours if it needs some work? We’ve covered everything you need to know.
Car finance credit scores: what you need to know
Before we look at how credit scores can affect car finance, it’s helpful to understand exactly what credit scores are.
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 number between 0-1250 that represents your borrowing history and helps lenders assess how likely it is that you’d be able to manage your loan repayments.
There’s no ideal credit score needed for car finance, or magic number to hit. But generally, the higher your credit score, the better, and the more likely it is you’ll be considered for a loan.
How your credit score affects car finance
Your credit score may influence the terms and interest rates you're offered for car finance. You don’t need a high credit score to finance a car, but a higher score 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.
What credit score do you need to finance a car?
There isn’t a specific credit score you need to finance a car in the UK. This is because there are three credit reference agencies (CRAs) – Experian, Equifax, and TransUnion TU and each one assigns credit scores in different ways. Rather than focusing on the number a CRA gives you, it may be a good idea to focus on the credit rating (for example ‘excellent’, ‘good’, ‘fair’, ‘poor’ or ‘very poor’).
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. Experian ranks from 0-1250, TU from 0-710 and Equifax from 0-1000.
Even if you have received a ‘poor’ or ‘very poor’ rating by a CRA, this doesn’t automatically mean you will not be approved for car finance. At Car Finance 247, we work with a wide panel of lenders who use different credit reference agencies to determine whether they could approve you in principle. Credit is subject to status.
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’s the minimum credit score to finance a car?
There is no agreed 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 will find it more challenging to get car finance from traditional lenders.
Credit scores vary between credit reference agencies. Below is what different CRAs consider a poor score:
Experian: 0 to 640
Equifax: 0 to 438
TransUnion: 0 to 565
With our simple car finance calculator, you can get an idea of what sort of deal you might 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 needed for car finance. Each lender uses different criteria when assessing applications. Generally, a higher credit score could improve your chances of being offered better interest rates and loan terms.
Credit score ratings vary depending on the credit reference agency and scoring model used:
Experian |
Equifax |
TransUnion |
|
|---|---|---|---|
Excellent |
1121 to 1250 |
811-1000 |
628-710 |
Very Good |
1001 to 1120 |
671-810 |
604-627 |
Good |
861 to 1000 |
531 to 810 |
566-603 |
Fair |
641 to 860 |
439 to 530 |
551-565 |
Poor |
0 to 640 |
0-438 |
0 to 550 |
Can you get a car on finance with bad credit?
It could be possible to get low credit score car finance. Even if your score is low, try not to worry. Some lenders, including ones we work with, specialise in bad credit car finance and may be able to consider you for finance if you have a lower credit score. However, it may mean a higher deposit or APR. Credit is subject to status.
How likely are you to get PCP car finance with a poor credit score?
Some lenders may look for good or excellent ratings when deciding whether to approve people for PCP finance. However, some lenders look at more than just your credit score, and may approve you for PCP car finance with a poor credit score. For the different CRAs, a poor credit score is as follows:
Experian: 0-640
Equifax: 0-438
TransUnion: 0-550
When you take out car finance, the lender is taking a risk by letting you drive the car now and pay for it over time. With PCP, that risk may be seen as higher, because you’re just paying for the car’s depreciation, not the total value. And the lender takes the risk that the car will be worth the balloon payment at the end, if you choose to pay it.
A good credit score may give lenders more confidence. But, you don’t necessarily need a high credit score for PCP. Credit is subject to status.
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 likely are you to get Hire Purchase finance with a poor credit score?
Hire Purchase (HP) is intended as a more affordable finance option long-term, so you don’t always need as high a credit score. A ‘fair’ or ‘good’ rating may be preferred, which would fall within the following:
Experian: 641 to 1000
Equifax: 439 to 810
TransUnion: 566 to 627
Do you need a good credit score for Hire Purchase? Not necessarily. It could help you get more preferable loan terms, but people with poor ratings may still be considered, subject to status and eligibility checks.
How does credit score affect APR?
A higher credit score could mean a lower APR (Annual Percentage Rate) because the lender may see you as less risky. If your credit score is high, it can suggest you’ve managed credit well in the past, paid on time, and are less likely to miss payments. This means lenders may feel more confident offering you a lower interest rate.
If your credit score is lower, there’s more risk for the lender, so they could charge a higher APR.
The table below is for illustrative purposes only and shows representative APR rates based on internal Car Finance 247 data.
Credit Band |
Rep % APR |
|---|---|
Excellent |
9.9% |
Good |
12.9% |
Fair |
19.8% |
Poor |
21.8% |
*Score ranges are illustrative and do not correspond to any specific credit reference agency. The figures are representative only and your actual APR may vary depending on your individual circumstances.
How does credit score affect your deposit on a car?
A higher credit score could mean a lower deposit is needed because it reduces the lender’s risk. If you’ve got a strong credit history, the lender may be more confident you’ll make all your repayments on time, so they don’t need to require much upfront payment from you.
A higher score helps reassure them that you’re a reliable borrower, so they may be willing to lend more and ask for less money upfront.
If you have bad credit, can you get car finance with no deposit?
It could be possible to get car finance with no deposit, even if you have bad credit. But, it can be harder and may cost more. Lenders usually see no deposit as a higher risk because you’re borrowing the full amount of the car without putting any money down upfront.
At Car Finance 247, some of our lenders do offer no deposit car finance options, but approval isn’t guaranteed and credit is subject to status. Bear in mind that no deposit might mean you’ll have fewer options and could be offered higher interest rates or stricter terms.
How to boost your chances of getting approved
Even if you have a poor credit score, you may still be eligible for car finance with certain lenders, subject to status. And there are some things you could do to try and 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 could 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 could help show 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 could also be an easy way to help 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 may consider various factors besides credit scores too, which could 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.
Deposit amount – Putting down a deposit upfront could 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 could 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 help give you an 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 use a soft search to give you a quote. If you proceed a hard search will be conducted which may impact 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.
Summary: It is possible to get approved for car finance even with a low credit score
The good news is, you may still get car finance with a bad credit score with certain lenders. At Car Finance 247, our lenders look at what you can comfortably afford, not just your past credit history. They may also factor in your income, regular outgoings and overall affordability.
So if you’re looking for car finance with a bad credit score or car finance with a low credit score, there may still be options for you.
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.