Does Car Finance Affect Mortgage Applications?

Woman unloading car and moving into new house

If you have a car finance agreement in place and have also begun a mortgage application, your car finance may affect whether or not that application is approved, and what rates you may be offered.

This is particularly the case if you have missed any of your repayments for your car finance, as this will negatively impact your credit score, and will therefore impact your mortgage application. On the other hand, making all of your repayments can actually improve your chances of mortgage approval. Read on as we take a closer look.

How does car finance affect your mortgage?

When you apply for a mortgage, the lender will scrutinise your finances. Whether you have an active car finance deal, or a previous one that has been fully repaid, will impact their decision for your mortgage application. This is because car finance is a form of debt. As such, your mortgage providers will look to see how conscientious you’ve been in repaying your car finance.

Remember, if you have defaulted on your car finance, or missed any payments, then this will impact your credit history. This will in turn affect your mortgage application, as you will appear less financially responsible and therefore of higher risk to your speculative provider. Thankfully, there are still ways of securing car finance even with poor credit.

On the other hand, a history of timely repayments and problem-free car finance can actually improve your credit score. Put simply, it shows that you are capable of making regular repayments as agreed and staying within your budget – as is required with a mortgage.

Does car finance impact affordability assessments?

The short answer is yes, if you have an active car finance deal in place, this will affect mortgage applications because of the affordability assessments that your prospective provider will perform.

Any mortgage provider will scrutinise your finances before offering a mortgage – this is actually a legal requirement, and involves looking at your credit score, employment status, debt, and history of loan repayment. If you’re currently repaying any loan such as car finance, this will be factored into your mortgage affordability assessment.

As a general rule, the higher the debt remaining for you to pay back on your car, the lower you’ll be lent for a mortgage – though this may vary depending on the provider. The theory is that the more you have to repay on other loans or assets, like your car, the less you’ll have to put towards your mortgage.

As such, if you do have a way of clearing the balance on your car finance before applying for your mortgage, this would be a sensible course of action, as your car finance won’t impact the application to such a degree.

Car finance made easy

At My Car Credit, we pride ourselves on our customer service, and will work hard to find you a car finance deal that suits your needs and circumstances – so you can help rather than harm your credit score and any future mortgage applications. If you’re wondering how to make a car finance application work alongside a mortgage application, talk to us today on 01246 458 810 or email enquiries@mycarcredit.co.uk.  

Representative APR 8.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed

Good

  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs

Fair

  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit

Poor

  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past

Bad

  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan
£

X monthly repayments of
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 8.9%, annual interest rate (fixed) 8.86%, 47 monthly payments of £184.94 followed by 1 payment of £194.94 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,387.12, total amount payable is £8,887.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

Should I Buy a Car or a House First?

Couple unloading car and moving into a new house

For most people, a car and home are two of the biggest personal assets purchased over a lifetime. Both are major financial commitments and of course, exciting milestones. So, should you buy a car or a house first? Like all investments, it’s important to do your research, crunch the numbers and compare different options before committing to a purchase.

If you’re tossing up between buying a new set of wheels or getting the keys to a home of your own, we’re here to help. Read on for an unbiased guide designed to help you answer the question, “should I buy a car or a house first?”

Your personal circumstances

Your personal circumstances are one of the most important things to consider when thinking about whether you should buy a car or a house first. The car vs house debate isn’t black and white, which means it’s important to factor in your unique situation when deciding.

For example, if you live in a major city like London with world-class public transport links and sky-high property prices, saving for a house deposit could be a smarter choice than putting your cash towards a new car. That said, many Londoners do choose to own a car and enjoy the benefits.

On the other hand, if you live in a smaller city, town or village where owning a car would have an enormous benefit on your day-to-day life and homeownership isn’t a huge challenge, purchasing a vehicle could be a better option.  

Budgeting for extra expenses

Homes and cars are both exciting purchases. However, it’s important to pencil in extra expenses for both assets. Below, we’ve put together a list of some of the biggest expenses coming your way when purchasing a car or property. While they’re not exactly “hidden”, they can add up quickly and factoring them in should be an important part of your decision-making process.   

The “hidden” costs of car ownership

  • Car insurance

Car insurance can be a big expense, especially for new and young drivers with minimal experience. It’s not unusual for average annual premiums for new drivers aged under 24 to top £1,000. Many motorists buying new cars choose to add GAP insurance, which offers extra peace of mind but increases the cost significantly.

  • Vehicle tax

Vehicle tax, or ‘road tax’ as it’s often referred to, is another big one. Costs average around £140 a year, though this can vary between vehicles.

  • Fuel

With analysts predicting forecourt prices to hit an all-time high over the coming months, fuel should definitely feature in your car ownership budget. Of course, your fuel expenses will depend on how often you use your car.

  • Parking

The cost of parking varies dramatically across the UK, with some cities offering free parking and others hitting you with huge fees. It’s worth doing your research before making a commitment.

  • Depreciation

Depreciation will vary depending on the make, model, and age of the car you purchase. New cars tend to lose around 20% of their value in the first year of ownership, while second-hand models depreciate at a slower and less sharp rate.

  • Servicing and maintenance

Depending on what car you buy, servicing and maintenance can be a big expense or a non-issue. Many new cars not only come with warranties but also free servicing for the first few years of ownership. In contrast, if you buy a second-hand vehicle, it’s worth factoring servicing and maintenance into your budget.

The “hidden” costs of homeownership

  • Insurance

Most homeowners choose to take out insurance, with the average policy costing £142 per quarter.

  • Property taxes

Property taxes can push up the price of home ownership, with rates calculated based on the value of the property.

  • General maintenance and upkeep

As a homeowner, it’s your responsibility to carry out general maintenance and upkeep on your property. Many financial advisors recommend allocating around 1-2% of the value of your mortgage to cover everything from big structural jobs to small cosmetic changes.  

  • Interest rates on your mortgage

Interest rates can have a big impact on the total cost of your mortgage and naturally, it’s important to shop around for the best deal.

Boosting your credit score

For many Brits, a lacklustre credit score is one of the biggest barriers to homeownership. Banks can be ruthless when it comes to checking your financial history and even small hiccups like a missed credit card payment or late phone bill instalment can affect your score.

This is where buying a car first and a home second can be a smart option. If you’re wondering does car finance help credit score, the answer is often yes. Taking out a car loan and committing to regular monthly payments can be a great way to build your credit score and prove to banks that you’re a responsible mortgage applicant.

Most home loans are significantly larger than the average car loan, which means lenders are even more strict when it comes to vetting applicants. A credit agreement with a car finance lender can help position you as a responsible borrower, so long as you pay your instalments on time.

There’s no need to worry about whether applying for car finance will affect your credit score, with the best brokers preceding formal applications with a ‘soft search’ credit check. This is a great way to check your eligibility and assess your options before actually applying for a loan that will leave a permanent signature on your credit score.

The final word on car vs house

Ultimately, the answer to “should I buy a car or a house first” depends on your own personal circumstances. You’ll need to consider your current financial situation, as well as factors like your lifestyle and personal preferences. Exploring a variety of different factors will help you decide whether vehicle ownership makes sense for you and if it’s a smart financial decision.

If you’re leaning towards a car finance broker over a mortgage broker, My Car Credit is here to help. With a large panel of lenders at our fingertips, we’re best placed to find a great deal for all kinds of drivers. Start by calculating car finance and then apply online, with no obligation and without impacting your credit score.

Representative APR 8.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed

Good

  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs

Fair

  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit

Poor

  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past

Bad

  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan
£

X monthly repayments of
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 8.9%, annual interest rate (fixed) 8.86%, 47 monthly payments of £184.94 followed by 1 payment of £194.94 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,387.12, total amount payable is £8,887.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

Does Getting a Car Loan Hurt Your Credit?

Car driving in the evening
Buying a car is likely one of the largest purchases you’ll ever have to make. This is why so many people are turning to car finance in order to make the process more manageable and affordable. However, occasionally we come across doubts about whether getting a car loan might hurt your credit.

This article will detail the different ways that getting car finance on your new vehicle might impact your credit – both positively and negatively.

What is a credit score?

Whether you know it or not, you will have a credit score. A credit score is used by lenders to understand your financial history. Furthermore, it allows them to make a judgement on whether you’re a good candidate for future loans. As such, lenders will perform credit checks on you to gauge this. These are known as either hard or soft, depending on whether they impact your score.

Credit reference agencies

Almost all forms of personal finance will impact your credit score. This is typically provided by different companies known as credit referencing agencies. Your number will usually be between 300 and 850. Generally, the higher it is, the better your credit rating – but there are variations between the companies who provide your score rating. In turn, this will impact where you sit on the spectrum of credit. A score of 500 with TransUnion would be below average for them, for example, but good for the provider Equifax.

Payment history and your credit score

Your payment history has a huge impact on your credit score, as does your history of applications. This is why if you make payments on time, this will positively affect your score. Conversely, there are things that might indicate to lenders that you’re a riskier candidate for a loan. For example, if your credit report shows missed payments or defaults, if you’re paying off multiple loans, or if you are near your credit limit. Your credit score might not be the singular factor in whether you’re approved for a loan. However, it will have an impact on your chances.

How does a car loan impact your credit score?

As with most things, getting car finance has advantages and disadvantages for your credit score. It will entirely depend on how you manage your repayments. It’s important to realise that when you first get your car finance loan, it will likely make a slight dent in your credit score. This is because it’s a hard enquiry into your credit history. However, if you are regular and on time with your repayments, this will soon bounce back.

Advantages of car finance on your credit score:

  1. If you make your repayments on time every time, this might have a positive impact on your overall credit score. In essence, it shows lenders that you’re a safe bet for future loans. Be aware, however, that this can take time to show up on your credit score.
  2. It diversifies your credit mix. Your credit mix refers to the types of credit that you have on your roster, which is usually divided between revolving credit (like credit cards) or instalment credit (like car loans). Lenders like a mix of both, so adding car finance onto your profile can make you more appealing for future loan applications. This in turn boosts your credit score.

Disadvantages of car finance on your credit score:

  1. If you are late on your repayments or miss one or more payments, your car loan is considered delinquent. You’ll typically be given a grace period to make the payment back. However, if your lender is required to take further action against you then your credit score will be negatively impacted. For example, if a full billing cycle goes by without you making payment. Consequentially, you might find it harder in the future to find good interest rates or a loan.
  2. If you default on the loan, your credit score will also be impacted. Should you continue to not make payments, the car finance lender may involve debt collectors, who could repossess your vehicle. Each of these elements – late payments, default, transference of the account to debt collectors, or repossession – leave a separate mark on your credit report. Furthermore, they’ll stay there for up to seven years, and they have a significant negative effect on your credit score.

Car finance and credit scores: what to know

Before you begin your hunt for car finance, it’s also important to understand the difference between different kinds of credit checks. This is because finance companies may conduct either a hard search or a soft search on your credit score.

Hard searches:

Some finance companies will conduct a hard search or enquiry on your credit report. This is a process that begins when you first apply for credit, and it requires your consent. However, it won’t happen if you’re only looking for pre-qualification to decide whether to apply.

A hard enquiry will take points off your credit score. This is temporary – usually staying on your report for two years – but will be visible on your credit report. It’s therefore best to limit the number of hard searches taking place on your score. You can do this by checking in advance of application whether you’re likely to be approved.

Soft searches:

Soft searches, by contrast, won’t impact your credit score. As such, they can take place without your knowledge. This kind of check is designed to give a ‘footprint-free’ check on your credit score, without lenders seeing any evidence of it. It aims to give you an idea of whether to enter into the terms of a car loan, without negatively affecting your score in the first instance.

Speak to My Car Credit today to find out more

If you want to find out more about whether or not getting a car loan will hurt your credit, speak to My Car Credit today. Our friendly team can help you get a car finance quote with a soft search that won’t impact your score. From there, you’ll be able to discuss your viability for a loan with one of our advisors. Get in touch today.

Representative APR 8.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed

Good

  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs

Fair

  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit

Poor

  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past

Bad

  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan
£

X monthly repayments of
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 8.9%, annual interest rate (fixed) 8.86%, 47 monthly payments of £184.94 followed by 1 payment of £194.94 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,387.12, total amount payable is £8,887.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

What’s the Difference Between Bad Credit & Poor Credit?

Woman at work checking her credit profile on her phone

Credit scores are a prerequisite for a number of financial processes, from loans and car finance to mortgages and tenancy agreements. In short, they show how well you have managed credit in the past, giving companies an indication of how trustworthy you are to keep up with payments on their products or services.

If your credit score is good, very good or exceptional, that will probably be the last you hear about it. But what if your credit score is bad or poor? These slightly vague terms may lead to more challenges with getting the loan, finance or even accommodation you need.

So, what do they actually mean? And is there a difference between bad and poor credit?

Defining bad and poor credit

Credit scores are a numerical representation of your credit history, taking into account various factors like paying your bills on time, carrying balances over on your credit card and even the number of credit checks on your record. The result is a three-digit number which is ranked from very poor or poor to excellent or exceptional, depending on the system.

Two of the most popular systems, VantageScore and FICO Score both use a scale of 350 to 800. With FICO score, 300-570 is poor while 580-669 is fair. Using VantageScore, 300-499 is very poor, 500-600 is poor and 601-660 is fair.

With both systems, from fair downwards is classed as a ‘bad’ credit score, which is why you might hear this broad term used. In short, it refers to anything below a good score, which is a cut off point for some lenders. Within this, there are sub-categories of bad credit like fair, poor and very poor credit, which refer to more specific ranges.

The other meaning of bad credit

The use of the term ‘bad credit score’ admittedly causes some confusion, because bad credit also has another similar meaning. Bad credit refers to a history of managing credit poorly.

If someone has continuously paid bills late, missed payments or built-up debt on their credit card, they will be said to have bad credit. The same is true for companies, who can have bad credit if they have a history of debt and late payments.

How will bad and poor credit affect applications?

The difference between a bad credit score and a poor credit score will matter most when you’re applying for any form of credit. As mentioned, some lenders will draw the line at bad credit, refusing to lend to anyone whose credit history isn’t good or above.

Others will happily lend to those with a ‘bad’ credit score as long as it is still rated as ‘fair’. Thankfully, there are also plenty of lenders who will still offer their services to people with a poor credit score. That means you can get car finance with a poor credit history, as well as other services such as loans or tenancy agreements.

Moving on from poor credit

At My Car Credit, we understand that poor credit doesn’t always mean you’re a bad applicant. A bad or poor credit score can be down to a number of factors, all of which can be changed over time. That’s why we aim to make buying a car with poor credit easier.

With a network of 27 trusted lenders, we’re committed to finding a fair deal for all customers, whatever their credit history. To find out more, contact us today on enquiries@mycarcredit.co.uk.

Representative APR 8.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed

Good

  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs

Fair

  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit

Poor

  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past

Bad

  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan
£

X monthly repayments of
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 8.9%, annual interest rate (fixed) 8.86%, 47 monthly payments of £184.94 followed by 1 payment of £194.94 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,387.12, total amount payable is £8,887.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

Can I Get Car Finance with Poor Credit History?

Car driving at night bought using car finance with poor credit rating

With the latest data from YouGov revealing 41% of British adults have missed debt repayments at some point in their lives, poor credit history is more common than you might think. There’s a shared belief that poor credit history can have a negative impact on your ability to secure finance. While there is some element of truth to this, it doesn’t mean you’re out of the running.

So, can you get car finance with poor credit history? Absolutely. Buying a car with poor credit is not always as straightforward as applying for a loan with a big deposit, a steady job and perfect credit history. However, don’t lose heart – with the right approach it can be done.

Worried your credit score may be a little tarnished? We’re here to help. Read on for our guide to securing car finance with poor credit history.

Car loans explained

Before applying for a car loan with bad or poor credit history, it’s important to understand exactly what you’re committing to. Like property mortgages, car loans offer you the freedom to secure a vehicle you may not be able to pay for upfront.

Car loans are not designed to help you purchase a vehicle you can’t afford in the long-term. Instead, they do allow you to spread out payments over a period of months or years. This means you don’t have to present a large sum of cash up front, which drastically increases the options available to you. 

Get a roadmap of your credit history

Suspect you have poor credit history? The first step to securing a car loan is to arm yourself with a clear overview of your credit history and score. A credit report will lay out the raw data and is the best place to start when assessing your financial situation. It should cover any active credit you have, as well as previously missed payments.

Hard vs soft credit checks

All reputable lenders will want to know about your borrowing history before offering you a loan, which is where credit checks come in. There are two main types of searches you’ll encounter when checking your credit history – hard and soft. ‘Hard’ checks can leave a mark on your credit score. What’s more, they give lenders insight into how many loans you’ve applied for in the past. If abandoned, hard credit checks can reflect badly on your borrowing status and damage your credit score even further.

In comparison, ‘soft’ searches aren’t visible to lenders and won’t affect your credit score. Instead, they offer lenders a good overview of your loans and finances, without leaving a visible footprint. 

Overcoming poor credit history

Struggling with poor credit? You’re not alone. There are all kinds of reasons people may be struggling with poor credit history. Here’s a few helpful ways to overcome poor credit history and secure a car loan.

  • Commit to regular repayments

One of the best ways to improve your status as a borrower is to commit to regular repayments on your existing debts. Even paying off the minimum amount shows lenders you have the capacity and commitment to repay loans. Over time this will help to improve your credit score.

  • Register on the electoral roll

Registering on the electoral roll makes it easy for lenders to check your name and address, as well as minimise the risk of fraud. It helps to present yourself as an active member of the local community and offers reassurance you’re a real person.

  • Save a good deposit

Putting together a healthy deposit can be a good way to show lenders you’re serious about saving. It also proves you have the ability to make future repayments. It improves lender confidence and can ultimately help to secure bigger loans at lower interest rates.

  • Seek help from a specialist lender

Seeking help from a specialist lender is one of the best ways to rise above poor credit history. At My Car Credit, we aim to help all applicants secure the car finance they need with quick and easy online applications.

Let us help with your car finance

As part of leading motor finance broker, Evolution Funding, My Car Credit has access to one of the largest ranges of car finance lenders in the country. We use specially developed technology to match your unique profile with the best loan products for your circumstances. And yes, this includes customers with poor credit history.

We pride ourselves on helping Brits with all financial backgrounds get behind the wheel. Why not get an application started today to jumpstart your journey to a new car loan?

Representative APR 8.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed

Good

  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs

Fair

  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit

Poor

  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past

Bad

  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan
£

X monthly repayments of
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 8.9%, annual interest rate (fixed) 8.86%, 47 monthly payments of £184.94 followed by 1 payment of £194.94 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,387.12, total amount payable is £8,887.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

What is a Car Finance Soft Search? – All Your FAQs Answered

man using laptop to apply for car finance with soft search

Just like applying for a mortgage or increasing your bank borrowing limit, seeking approval for car finance often calls for a soft credit search. So, what is a soft search credit check? Carried out by the lender, a car finance soft search is designed to determine your eligibility for credit. This information is used to build a credit profile and establish if you’re a suitable applicant.

Ultimately, soft searches help to answer questions like how much to lend and at what interest rate, as well as whether you’re eligible for any special deals or rates. Want to know more about car finance soft searches? Read on as we answer all your burning questions, including what does a soft search show, where does the financial information come from and whether there are any benefits of soft search.

What is a soft search?

Also known as a soft credit check, soft searches reveal your personal financial history without leaving a footprint on your credit report. They allow lenders to follow up and confirm information you have offered which is used to generate a quote.

What does a soft credit search show?

One of the biggest questions asked by car finance applicants is what do lenders see on a soft search? The short answer is a snapshot of your personal credit profile. This includes information such as credit card limits, phone contracts, mortgages, personal loans and any other relevant material that helps determine whether you’re likely to pay back the loan. If you have a County Court Judgment (CCJ) court order registered against you for failing to repay money this will also appear.

What does the ‘soft’ mean?

While car finance soft searches do reveal valuable information, they don’t leave a signature on your credit profile. Instead, soft searches remain invisible to third parties and lenders, and are only visible to the applicant.

What are the benefits of car finance soft search?

One of the major benefits of car finance soft searches is the invisible footprint. They offer lenders a snapshot of your credit history and score without leaving a permanent mark on your personal report.

While hard credit searches are not necessarily a burden, having too many appear on your report can spook prospective lenders and imply you’re in constant need of credit. Hard searches that don’t result in approval can be particularly dangerous as they suggest you’re credit hungry but haven’t managed to win over any lenders due to bad credit history.

On the other hand, soft searches are designed to give car finance lenders peace of mind while keeping your credit report clean. So, when applying for finance there’s no reason at all to hold back on a soft credit search.

Will a car finance soft search affect my credit report?

The answer to this question is a firm no. While a soft credit search car finance check will reveal information on your credit history, it won’t leave a footprint on your file and your rating will remain unaffected.

Where does car finance soft search information come from?

In the UK, lenders generally use three major credit reference agencies to determine your credit score – TransUnion, Equifax and Experian.

Can soft credit search car finance help me?

While the concept of credit checks can be intimidating, if you’ve got nothing to hide, they can actually help you secure a better deal on your loan. At My Car Credit, our applicants fall into one of two categories – prime or subprime. Applicants with good credit status fall into the prime category and are offered a transparent actual annual percentage rate (APR) or ‘real rate’ upfront.

If you have a compromised credit history, you’re still eligible. There’s just a little more work to be done before securing a loan. Using your application details, our team work hard to find a suitable deal from our panel of more than 34 lenders.

Car finance soft searches also empower you with the freedom to shop around for a good deal before making your final decision on a lender. While hard searches could have a negative impact on your credit history, soft searches allow you to seek pre-approval for loans without leaving a mark on your credit history.

What’s the process?

Less formal than a hard credit check, soft searches are designed to be quick, easy and stress free. At My Car Credit, the process starts with our cost of car finance calculator, before completing a short online application form. This shouldn’t take more than a few minutes and covers details such as your name, address, employment history and date of birth.

Once the form is completed, we’ll run a quick check and let you know the results online, as well as via text and email. Everything is transparent and we’ll never carry out any searches without your permission.

Do bear in mind that once you decide to proceed with your application, some lenders will perform a hard search.

Is there a fee?

At My Car Credit, we don’t believe in charging for the soft search application process. There are no extra charges associated with our soft credit search and typically the results will help you find the right deal for your circumstances.

The final verdict

Ultimately, a car finance soft search is a great way to reassure a lender and secure a loan without compromising your credit score. With no fee, no footprint and the potential to unlock excellent rates, there are virtually no downsides to carrying out a car finance soft search. A win-win for applicants and lenders.

Still have more questions on what a soft credit search is? Reach out to the team at My Car Credit to find out more about how a car finance soft search can help you secure the best possible loan.

Whether you have a glowing credit record or are struggling with black marks like debt or a CCJ, our team is on hand to help you secure finance and get behind the wheel of your own car as soon as possible. We’ve also built a huge library of help and advice articles covering everything from how to improve your credit score to what repayment terms are best for you.

Representative APR 8.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed

Good

  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs

Fair

  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit

Poor

  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past

Bad

  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan
£

X monthly repayments of
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 8.9%, annual interest rate (fixed) 8.86%, 47 monthly payments of £184.94 followed by 1 payment of £194.94 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,387.12, total amount payable is £8,887.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

Everyday Hacks to Improve Your Credit Score

Lady uses credit card to improve credit score

Whether you like it or not, your credit score is important. Want a credit card? Check your credit score. Want a mortgage? Check your credit score. Whatever way you look at it, your financial life is dictated by these three numbers. A good credit score is generally seen as being 670 or above. So, don’t sit around wasting time if you’re not there yet. Use our everyday hacks to improve your credit score.

Automate your payments

It’s simple – don’t miss your payments. You can make a standing order with your bank to make sure you’re prompt with payments. Alternatively, set a monthly reminder on your phone if you want to manually make payments.

Have a few lines of credit

When you have multiple open lines of credit – and they are being used correctly – credit agencies begin to take notice. It’s a sign of trustworthiness and organisation. Two or three is the sweet spot.

Use all your cards

Some people think the lower their credit card utilisation is, the better – they’re wrong. Using your credit card is a vital part of proving your responsibility to credit agencies. Don’t get yourself into debt making big payments, just make regular smaller payments – the kind of things you might normally make in cash or whack on your contactless debit card.

Balance out your cards

Make sure that your credit cards are levelled-off at all times. If you have one card that is looking a bit low, top it off with another one. Managing your credits by switching balance from one card to another shows financial maturity.

Pay off, don’t close off

Around 15% of your credit score is decided by the length of your credit history. If you close your old accounts you can shorten the time and affect your credit score. So, pay them off, don’t close them off.

Take out a credit builder card

If you haven’t had the opportunity to build up a credit score yet, or you’ve got a less than perfect score, take out a credit builder card. These are real tests: they have low credits and high interest rates, so manage this right and you’re onto a winner.

Piggyback on someone’s credit score

Adding yourself onto a credit account of someone with a good rating (with their permission!) is a great way of improving your credit score. It proves you are trustworthy with money. This is usually best to do with a partner or family member.

Up your credit limits

Don’t panic, we know this sounds crazy. This is actually a very effective way of lowering your credit utilisation and improving your credit score. Here’s how it works: you use £300 each month on your credit card but have a limit of £600, your credit utilisation is 50%. If you increase your credit limit to £900, your credit utilisation drops to 30%. Just don’t be tempted to splash out.

The three numbers that make up your credit score have a massive effect on your life, so it pays to improve it as much as possible. We’re sure that if you follow our credit score hacks, you’ll be on track to more approved financial applications, lower interest rates and a richer financial life.

In the meantime, rest assured that My Car Credit is on hand to help you with poor credit car finance – a successful application and maintained payments can even improve your credit score over time!

Representative APR 8.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed

Good

  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs

Fair

  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit

Poor

  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past

Bad

  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan
£

X monthly repayments of
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 8.9%, annual interest rate (fixed) 8.86%, 47 monthly payments of £184.94 followed by 1 payment of £194.94 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,387.12, total amount payable is £8,887.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

How can I improve my credit score?

Dial showing credit score of excellent through to poor credit score

The better your credit rating is, the easier your car finance journey will be – you’ll be offered lower interest rates and have cheaper repayments to make each month. So, it’s worth aiming for an improved credit rating! For those that are having difficulty getting car finance because of a poor credit score, we’ve got eleven excellent tips to help you out.

  1. Make sure you are on the electoral roll – Lenders check this to protect themselves against fraud and to check that you are who you say you are. You can find out how to register by visiting Your Vote Matters.
  2. Cancel any out-of-date credit cards – Many people switch cards regularly but forget to cancel old agreements if they no longer use the card. These lines of credit will still appear on your credit file and can make lenders wary about the size of your debt – some may fear that you will ‘max out’ these cards and then struggle to make repayments.
  3. Apply truthfully – Make sure that the information you provide on applications is accurate and truthful. Inconsistencies can have a negative effect on your credit score and could be considered fraudulent.
  4. Don’t over-apply! – Too many applications, especially in a short space of time, can have a negative effect on your future score. This is a bit of a ‘catch–22’ as if you get rejected, or the rate you are offered is poor, you’ll want to keep applying to see if you can get a better deal, but at the same time your chances of being accepted will start reducing. For initial research, we offer a soft search application that doesn’t appear on your credit file.
  5. Use a credit card to (re)build a history – Lenders want to see that you have a reputation of managing credit sensibly. Those with little credit history, even if none of it is bad, are often rejected because they’re difficult to predict. If you don’t have a (good) credit history, build one. The easy way is with any credit card – just spend a small amount each month on it (e.g. £60), and make sure you repay in full each month (preferably by Direct Debit).
  6. Top up your credit card – As well as making sure that all your repayments are made on time by Direct Debit, pay manually on top of this each month. That way you guarantee that you’ll never be late with basic payments, and you’ll also have the flexibility to pay for any further financial responsibilities.
  7. Update your credit report – If you have defaulted on credit or had a County Court Judgement (CCJ) against you, it will be recorded on your credit file. Even once debts are settled, some lenders may restrict who they lend to, especially if the CCJ has been given within the last 12 months. Therefore, it is important that as soon as your debts are settled, you make sure that your lenders inform the credit reference agencies and that your credit report is updated accordingly.
  8. Apply for a guarantor loan – If you’re getting rejected for a car finance loan based on your individual credit score, see if you can be accepted for a guarantor loan. This kind of finance option allows you to improve your credit score as you go along, as (in theory) you should never miss repayments. You’ll need to have a close friend or family member with a good credit score that trusts you to make repayments but will financially support you where necessary.
  9. Look carefully at the small print – Make sure that you look at all the information on your credit file to ensure it accurately reflects your current circumstances. Keep a watchful eye for any errors or evidence of charges caused by identity theft or fraud.
  10. Check if you are linked to another person – Having a spouse, friend or family member’s credit rating linked to yours through a joint account could affect your personal rating if they have a poor score.
  11. Include additional information – Where necessary, provide further information regarding any previous credit problems. If such problems occurred following identity fraud, redundancy or divorce, and your financial situation has improved since, you can add a note explaining this.

We hope this has given you a good insight into how to improve your credit score, but if you want any other information, you might be interested in visiting our related article:

How to check if you can get finance for a car without affecting your credit score

At My Car Credit, we are open to accepting applications from people with less than perfect credit scores. So, if you require further advice, please do not hesitate to contact one of our friendly My Car Credit Specialists – they will be more than happy to help and guide you the whole way through your car-buying journey!

Representative APR 8.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed

Good

  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs

Fair

  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit

Poor

  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past

Bad

  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan
£

X monthly repayments of
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 8.9%, annual interest rate (fixed) 8.86%, 47 monthly payments of £184.94 followed by 1 payment of £194.94 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,387.12, total amount payable is £8,887.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!