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Refused Car Finance – What to Do Next

Car finance can be a fantastic way to secure the keys to your dream ride. However, it’s not uncommon to be refused the first time around. There are all kinds of reasons why you may have been refused car finance, some easy to overcome and others a little more complicated.

The good news is, there are always options. If you’ve been refused car finance but believe you’re a reliable and worthy borrower, this guide is for you! Read on as we cover everything you need to know about how to deal with a rejected car finance application, what to do next and the steps you need to take to get behind the wheel of a new car.

Step 1: Understanding why you were refused car finance

The first step is to get a better idea of why you were refused car finance. Understandably, most lenders are strict about who they approve for finance. After all, a car finance loan is a big commitment and lenders want to make sure they recoup their investment. Here’s a few of the most common reasons why you may have been refused car finance:

A bad credit score

A bad credit score is one of the most common reasons applicants are refused car finance. Most lenders use consumer credit reporting agencies such as Equifax or TransUnion to assess the suitability of car loan applicants. Equifax issues scores of between 0 and 700, with the average Brit clocking in at around 380. TransUnion rates borrowers on a 0 – 710 scale, with averages in the UK sitting at around 610. Experian is another popular agency and ranks you on a scale of 0 – 999.

Why do you have a low credit score? It’s due to poor credit history. Credit reference agencies keep track of bad credit activity, such as missed payments on utlity bills, outstanding debts on finance or a lack of steady income. Hard searches on your credit file typically display this for up to six years before the date you’re applying.

It’s not always easy to maintain a glowing credit score, as many Brits know. If you’ve ever missed a payment on your credit card, you’re not alone. The latest YouGov research revealed around 15% of UK adults have defaulted on credit card payments, which can knock a decent amount of points off your credit score. The figure is even higher in London, where 19% of credit card holders have missed a payment.

An ambitious budget

In other cases, your budget may be too ambitious for car finance lenders to approve. When assessing your application, lenders will consider personal circumstances, such as your employment status, income and ongoing life expenses to determine if you can afford the loan. If there are any doubts, your application may be refused.

Let’s say you want a hire purchase deal that costs £500 a month and you have regular income of £2,000 from your monthly salary. You might think applying for car finance is a sure-fire thing. But once you factor in mortgage or rent payments, utility bills and other typical outgoings, you might only just have enough left to make the payment to your finance company.

Even with a good credit score, it might be too much. But pair that with a less-than-perfect credit score, and many lenders won’t want to take the risk. As well as risking missed or late payments for themselves, mainstream lenders have to lend responsibly to avoid finance agreements leaving customers worse off. So, without the right affordability, lenders could refuse your car finance.

Incomplete application

Your application doesn’t just offer lenders insight into your borrowing history but also your competency and organisational skills. Incomplete applications can be an instant turnoff for lenders, so it pays to give your documents a thorough once over before hitting send.

When you apply online, it can be tempting to send old documents that are stored on your computer or phone, for example. Maybe you have recently changed address, meaning you’ll need different documents to apply for car finance. That’s often the case for younger customers who have just moved out having passed their driving test!

Finance companies have their own criteria, so every little error could negatively impact your chances of securing that dream car.

Now you have a better idea of why you were refused car finance, let’s take a look at what to do next…

Step 2: Enlisting the help of experts

Car finance can seem complicated but with the help of experts, it doesn’t have to be. At My Car Credit we specialise in getting Brits into the driver’s seat of their ideal car, no matter what their credit score. How do we do it?

A large lending panel

With access to one of the largest lender panels in the country, we take a wide-reaching approach to car finance. Instead of considering just a handful of preferred lenders, we reach out to dozens of finance companies across the country. This drastically improves your chances of being approved for car finance, no matter what your circumstances, borrowing history or credit rating.

If your credit profile doesn’t meet one lender’s criteria, you still have a chance of being approved by one of our other lenders. That’s how we secure finance agreements for young drivers, self-employed applicants and more.

Award-winning technology

We’re part of Evolution Funding, one of the largest and most trusted car finance brokers in the UK. Our service is backed by their award-winning technology, making it faster and easier for us to match your loan application with the right lender.

A personalised approach

There’s no one-size-fits-all approach at My Car Credit. We assess every car finance application individually, meaning you’re matched with the best possible lenders for your unique circumstances. If you’ve had previous rejections due to a poor credit rating, that doesn’t mean you can’t get car finance with us.

For more information, check out our guide on car finance explained.

Step 3: Improve your chances of a car finance agreement

After you’ve developed a good understanding of why you were refused car finance and have enlisted a team of experts to help with your application, it’s time to start improving your chances. Here’s how:

Boost your credit score

There are lots of ways you can boost your credit score, some easy and others requiring a little more time and dedication. Registering on the electoral roll and keeping on top of regular payments such as a credit card repayments or your phone bill are both great ways to improve your credit score. If your credit score is lacking due to a lack of financial history, applying for a basic credit card can be a good way to develop a positive paper trail that establishes you as a reliable borrower.

Pad out your deposit

A small deposit suggests you’re just scrimping by and can be a red flag for lenders. Saving cash where you can and using it to pad out your deposit is a foolproof way to improve your status as a borrower and show lenders you can commit to a regular savings regime.

If you can afford a larger deposit sum upfront, it’s always worth putting it towards your new car. It will reduce the total loan amount, making car finance less of a risk for the lender. It will also reduce your monthly repayments, so you can soon save back the money you added to your deposit.

Securing car finance with poor credit history

Just because you have a less-than-perfect credit history, it doesn’t mean you’re out of the running for a loan. With the right approach, your chances of securing car finance with poor credit are high. If you’re struggling with other barriers such as being self-employed or a lack of credit history, we can help.

At My Car Credit, we understand the difficulties you face with a poor credit rating. Not least that a hard search will stay on your credit file. That’s why we only use a soft search initially to get an idea of your credit profile before moving onto the next steps.

Whatever information we receive from the credit agency, the search won’t appear on your credit report. But even if we find you have bad credit, we can still work to get your application approved if repayments are affordable.

Ready to get the wheels moving on your application? Get in touch by emailing enquiries@mycarcredit.co.uk or give us a call on 01246 458 810 to find out more about how to proceed after being refused car finance.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

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!

or call 01246 458 810

How to Find Car Finance for Young Drivers

Getting your first car is a big deal. It’s freedom, independence and the ability to do what you want, when you want. Whether it’s driving to a part-time job, road-tripping to Alton Towers with your mates or just avoiding the endless faff of unreliable buses, having a car gives you flexibility and freedom.

But here’s the sticking point – cars are expensive. And most young motorists don’t have the money to buy one outright. That’s where car finance for young drivers comes in, allowing you to spread the cost over time and get on the road sooner.

That said, car finance can feel like a maze. Between credit checks, finance types, deposits and jargon, it’s easy to feel like the whole thing isn’t made with young drivers in mind.

We’re here to fix that. This guide will cover everything you need to know about cars on finance for young drivers in the UK. Yep, even with little credit history or part-time income. We’ll break down what lenders actually look for, how to choose the right car and finance type, and what steps will help you get approved.

Can young drivers get car finance in the UK?

Yes! More young people are doing it every year. In fact, getting a car on finance for young drivers has become one of the most popular ways for under 25s to secure a first or second vehicle.

But there are a few things that make it trickier when you’re just starting out. Here’s what you need to know:

You must be 18 or older to apply for car finance in the UK.
If you have little or no credit history, lenders can’t easily judge how responsible you are with money.
Many young drivers are in part-time or gig work, which can make income harder to verify.
Lenders see new drivers as higher risk, since younger people are more likely to make insurance claims or miss repayments.

That doesn’t mean you’ll be turned down automatically. It just means lenders will look at your whole financial picture, not just your age. Plus, there are steps you can take to make yourself a stronger applicant and score the best car finance for young drivers.

What lenders look for in young driver applications

Lenders aren’t expecting you to have a glowing credit report and a £40k salary at 19. But they do want reassurance that you’re a safe bet. Here’s what they’ll be checking:

Age

You need to be 18 to legally enter into a credit agreement. Some lenders prefer applicants aged 21+, but many now offer flexible options for 18-20-year-olds, especially with a guarantor.

Employment and income

Most lenders want to see some kind of regular income, even if it’s from part-time work or self-employment. You don’t need a full-time office job (even shifts at Costa or Deliveroo earnings can help) but the more predictable your income is, the better.

Credit score

A good credit score shows you can manage money responsibly. But if you don’t have a score at all yet, don’t panic. Many young applicants are in the same boat. Lenders may just ask for a bit more info or suggest a guarantor.

Affordability

Lenders calculate whether the monthly repayments, plus your insurance and living costs, are realistic. Applying for a £15k car with a £400/month repayment when you earn £900/month won’t fly. £150/month for a £5k car? Much more doable.

The best types of car finance for young drivers

There’s no one-size-fits-all answer. The reality is that some plans suit young drivers better than others. Here’s a rundown of your options for car finance for young drivers:

Hire purchase (HP)

HP is one of the most popular finance options for new drivers, because it’s simple and stable.

Pay a fixed amount each month
No mileage restrictions
You own the car at the end of the term

It’s easy to understand, budget-friendly and often more accessible for those with limited credit.

Example: You’re 19, working part-time and want to buy a £6,000 car. With HP, you might pay around £140/month over four years, and it’s yours once you’ve made the final payment.

Personal contract purchase (PCP)

PCP lets you lease the car for a fixed term with the option to:

Return it at the end
Pay a balloon payment to buy it
Trade it in for a new model

Monthly payments are lower than HP, but you won’t automatically own the car unless you make the final payment. PCP is great if you like the idea of upgrading every few years or want lower payments short-term. Just keep an eye on mileage limits and wear-and-tear terms.

Example: You finance a nearly-new Ford Fiesta for three years. You only pay for the depreciation, not the full cost, which keeps your payments low.

Personal loan

You can also take out a personal loan from your bank or another lender to buy the car outright.

You own the car from day one
Use the money wherever you like (including private sales)
Great for those with strong credit or parental co-signers

It’s not always ideal for first-timers, but if your credit’s decent or you have a guarantor, it can offer more flexibility.

Guarantor finance

This is when a parent or family member agrees to cover the loan if you can’t.

Can open up better deals and lower rates
Lenders see it as less risky
Everyone involved needs to understand the legal responsibility

Guarantor finance is a useful option for students or young people without a credit record. Just make sure both parties are 100% clear on the terms.

Family support: help from the Bank of Mum and Dad

Let’s be real, getting on the road isn’t cheap. From buying the car itself to sorting insurance and ongoing running costs, it’s no surprise that many young drivers turn to family for help.

Research from the AA found that over a third of young drivers (26%) received some form of financial help toward purchasing a car, whether that was with the deposit, monthly finance payments or insurance costs. The top reasons? A reward for passing the driving test, a birthday gift, starting university or celebrating exam results.

It’s nice to have help. But of course, lots of young drivers don’t benefit from that level of support. Around 66% of young motorists haven’t received any financial help from family. If you’re in that majority, don’t panic. You’re certainly not alone and there are still affordable ways to get behind the wheel, especially when you work with a broker like My Car Credit.

How to boost your chances of getting approved

There are lots of practical steps you can take to improve your odds, even with limited credit or income.

Use a broker

A broker like My Car Credit has access to dozens of lenders, not just one. This increases your chance of being matched with someone who understands young drivers and offers better rates.

Improve your credit

Start building your credit before you apply. The below steps can work wonders for your score:

Register to vote
Use a credit builder card and pay it off in full each month
Avoid missed payments on bills or subscriptions

Every little bit helps, especially over 6-12 months.

Get a guarantor

A parent or guardian can act as your financial safety net, which reassures lenders. It’s not always needed but it helps if you’re still living at home or just starting work.

Apply for what you can afford

Lenders love realism. Start with a modest, reliable car to show you’ve got your head screwed on. You can always upgrade later once your credit and income grow.

Pick the right car

Small, fuel-efficient, and low-insurance group cars are a good bet. Think:

Ford Fiesta
Renault Clio
Honda Jazz
Volkswagen Polo
Mini Cooper
Kia Picanto

Avoid anything flashy, thirsty or expensive to fix. It’ll only bump up your repayments and insurance. Not to mention bring down your chances of approval.

Choosing the right car for your finance application

The car you choose has a huge impact on your application. Here’s what matters:

Car value

Lower value = lower repayments = easier approval. Basically, lenders are more likely to offer car finance for young drivers if the value is modest.

Insurance groups

Choosing a car in a low insurance group (models like the VW Up, Hyundai i10 and Toyota Aygo) can be a great way to win over lenders and boost your chances of approval. Looking for car finance for young drivers with insurance rates you’ll love? Check out our roundup of the 10 Cheapest Cars to Insure for Young Drivers.

Consider used

Used or nearly new cars don’t just cost less. They hold their value better and can be just as reliable as showroom vehicles. Avoid write-offs or private sales. Lenders prefer trusted dealers like the ones you’ll find in My Car Search.

Insurance and finance: why they go hand-in-hand

It’s easy to think of car insurance and car finance as separate things. Not true! They’re linked and lenders know it.

When reviewing your application, lenders consider:

Insurance costs as part of your monthly expenses
Your ability to afford both the loan and the insurance
How likely you are to make repayments long-term

Consider black box insurance

Looking for ways to save on car finance for young drivers with insurance? A black box (or telematics) policy tracks your driving and rewards you for being careful. It can lower your premium significantly and show lenders you’re a low-risk driver.

Ideal for under-25s
Proves you’re responsible
May positively influence lender decisions

Tips to improve your credit score as a young driver

Your credit score is like your financial reputation. The better it looks, the better your finance options.

Here’s how to start building it, even as a student or first-time earner:

Get on the electoral roll – This proves your identity and address – a quick win if you want to boost your score.

Use a credit-builder card – Spend a little each month (like your Spotify or Netflix bill) and pay it off in full.

Avoid missed payments – Set up direct debits for your phone, utilities and subscriptions.

Keep credit utilisation low – If you have a £500 limit, try not to use more than £150-£200 at any one time.

Check your credit file regularly – Use tools like Experian, ClearScore or Credit Karma to spot errors or see progress.

Remember, building credit takes time. But starting now pays off when you’re ready to upgrade or apply for a mortgage down the line.

Don’t forget: young driver incentives

Some lenders, car brands and dealerships offer special deals on car finance for young drivers. These can include:

Cashback offers
Deposit contributions
Discounted servicing packages
Free insurance for a year
Student-specific deals (especially through unis)

Always ask what offers are available. You might be surprised by what’s out there! Every little saving helps when you’re just getting started.

Why use My Car Credit to find young driver car finance?

At My Car Credit, we’re here to make your first (or second) car finance experience smooth, safe and totally stress-free.

Here’s what makes us different:

Wide lending panel – We work with the UK’s biggest panel of lenders, including high-street banks and alternative options. More variety means more options for young drivers.
Our soft credit check means zero impact on your score.
Quick, online application – No paperwork piles or long phone calls when you’re trying to cram for a uni exam.
Expert support from real people who know how to finance cars for young drivers. We know our stuff and can also help with tips on car finance for young drivers with insurance.
Transparent terms – What you see is what you get with My Car Credit. No sneaky fees or jargon. Just the best car finance for young drivers.

It’s everything you need, minus the headache. Whether you’re a student in Sheffield, a new apprentice in Reading or have just scored a post-grad job in London, we’ve got your back.

Ready to get started? Use our car finance calculator to see what you could afford or apply online now.

FAQs

Can I get car finance at 18?

Yes! 18 is the legal minimum to get a car on finance for young drivers in the UK. Your options may be limited without income or a credit score, but a guarantor can help.

What’s the best car finance option for young drivers?

Looking for the best car finance for young drivers? Hire purchase is the most straightforward. PCP is good for flexibility and lower payments. Guarantor finance works well if you’re just starting out.

Can a student get car finance in the UK?

Yes, especially with a part-time job or a guarantor. Many lenders are happy to work with students as long as repayments are affordable.

Do young drivers need a guarantor?

Not always, but it helps if you’re under 21, don’t have credit history or aren’t earning much yet.

What credit score do I need for car finance?

There’s no fixed score, but the higher your score, the more options and lower rates you’ll get. You can still get finance with fair or limited credit.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

How Does Car Finance Work in the UK?

What is the Oldest Car a Bank Will Finance?

What Happens if I Can’t Pay My Balloon Payment?

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

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!

or call 01246 458 810

affordability car finance options credit score Jan24 young drivers

What Credit Score is Needed for UK Car Finance?

Your credit score is one of the most important tools used by lenders to assess car loan applications. So, what credit score is needed for UK car finance? There’s no black-and-white answer, however, there is a lot to learn when it comes to credit scores.

Your credit score is one of the most important tools used by lenders to assess car finance applications.

As to the question of what credit score is needed for UK car finance, there’s no hard and fast answer because different car finance lenders have their own requirements.

While there’s generally no universal minimum score you need to secure car finance, your credit report will nonetheless impact your eligibility and the kinds of rates you’ll be offered. The higher your credit score, the better terms and rates you’ll benefit from.

As such, it’s sensible to compare your options with different lenders and improve your credit before applying – read on to find out more.

Understanding credit scores and their impact on car finance

A credit score is a three-digit number that reflects your reliability and trustworthiness as a borrower based on your history of credit management and use. The range of credit scores varies from ‘excellent’ to ‘very poor’.

Lenders will use your credit score to evaluate your risk as a lender. The higher your score, the better the terms and rates you’ll benefit from, and you’ll likely be eligible with a wider panel of lenders.

Your credit score is calculated based on several factors. These include payment history, the percentage of your credit you’re using, the length of your credit history, and the number of ‘hard’ credit checks on your account.

The ‘big three’ UK credit reference agencies

In the UK, most lenders use three main CRAs (credit reference agencies) to vet applicants. Each agency has its own scale that it uses to assess individuals and assign them a credit score. They also have their own custom eligibility criteria which will factor into your car finance eligibility.

Credit scoring ranges from ‘very poor’ to ‘excellent’. Most people will fall in the ‘fair’, ‘good’, or ‘excellent’ range. Anything below ‘fair’ is considered ‘poor’ and will impact the car finance rates and terms you’ll be offered.

The three main CRAs in the UK use the following credit score ratings:

	Equifax	TransUnion	Experian
Excellent	811+	628-710	961-999
Very Good	740-799	NA	NA
Good	531-670	604-627	881-960
Poor	0-438	551-565	561-720

What credit score is needed for car finance in the UK?

You can assume that your credit score rating means the following:

Excellent: You’re considered a low-risk borrower and will access the best rates and deals

Good/fair: You’ll be considered less risky than those with poor credit and will benefit from competitive rates

Poor: Your options will be more limited, but it’s still possible to secure poor credit car finance

Remember that each lender will have their own eligibility criteria beyond your credit score. For example, some lenders may prioritise proof of income, whereas others place more weight on your debt-to-income ratio.

Other factors that influence car finance approval

Your credit score is critical to determining your car finance eligibility.

That said, there are other factors that will also influence your likelihood of approval, including:

Deposit size: A larger deposit (also known as a down payment) reduces the overall loan amount, which can lower your interest rate and make you a more attractive loan candidate.

Loan term: The longer the loan term, the higher the interest rate you can face because longer loans are riskier to lenders.

Debt-to-income ratio: This measures how much debt you owe compared to your income. The higher the ratio, the riskier you are to a lender.

Stability of income and employment status: Younger applicants are riskier than those with established, stable incomes. Equally, lenders will want to check that your income matches the payments going into your account.

Can you get car finance with a low credit score?

If your credit report is less than perfect, don’t panic. It’s more than possible to secure car finance with poor credit.

Brokers like My Car Credit can help you secure favourable deals even if your credit report isn’t at its best.

We combine a wide panel of trusted lenders with a sensible approach to help you find the right agreement for your circumstances. Our tailored approach means that we may even be able to approve you for car finance where others haven’t.

That said, there are easy ways to check and improve your credit score.

How to check and improve your credit score

You can ask any of the CRAs we mentioned above for a copy of your credit report. This allows you to check your score via a soft credit check.

A soft credit check doesn’t leave a mark on your credit report. They’re only visible to you (the applicant), remaining invisible to lenders and third parties. Remember that if you choose to advance your finance application, your credit report will typically be subject to a hard search, which will leave a mark.

There are plenty of ways to improve your credit score. Some of the best strategies for improving your credit score include:

Registering on the electoral roll: Lenders will check this to check that you are who you say you are, protecting themselves against fraud.
Making timely payments: Lenders want to know you’re capable of responsibly managing your credit, and making timely payments helps to prove this.
Reducing your credit utilisation: Spread your payments across your accounts, as this process shows you know how to manage your money.
Avoiding multiple hard credit checks: Hard credit checks leave a mark on your report, and too many of them won’t be looked on favourably by lenders.

How does my credit score affect my car finance application?

Your credit score will impact your car finance application in several ways. For one, the higher your credit score, the better your eligibility for more favourable rates and terms. In other words, you can expect lower interest rates with higher credit scores.

Applicants with higher credit scores may also benefit from better loan amounts and terms, and may be able to access a broader panel of lenders. This affords more options when shopping around for a favourable, tailored car finance loan.

The role of My Car Credit in securing car finance

As part of Evolution Funding, the UK’s largest motor finance and technology provider, My Car Credit has access to the largest panel of car finance lenders nationwide.

This means we can offer personalised support to borrowers, leveraging our expertise, lender network and award-winning technology to find the right car finance for your needs and circumstances. Our goal is to help you buy the car you want at the budget you can afford.

Use our car finance calculator to assess your car finance eligibility. You’ll receive a no-obligation quote in minutes, giving you a breakdown of your expected monthly payments, typical interest rates, and total payable.

If you’re unsure about the kind of car finance that might work best for you, contact our friendly team of Car Credit Specialists today.

Frequently asked questions

Can I get car finance with no credit history?

At My Car Credit, we consider applications from drivers of all circumstances. Whether you’re a first-time motorist, self-employed, or have a poor credit rating for different reasons, we can work with you to secure car finance that accommodates your circumstances.

Will checking my credit score lower it?

Checking your credit score won’t lower it. In fact, it’s sensible to regularly check your report for free so that you can establish whether there are any potentially harmful errors that need rectifying. Plus, regularly checking your score means you’re more likely to be upfront with lenders from the get-go, reducing the risk of rejection further down the line.

Does car finance improve credit score?

Repaying your car finance in full and on time can help to improve your credit score in the long run. This can improve your eligibility for future loans, as you’ll be seen as a more reliable, less risky borrower.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

What is a Good APR for Car Finance in the UK?

Car Loan APR Explained

8 Benefits of an Auto Loan Payment Calculator

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

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!

or call 01246 458 810

car finance check car finance options credit score equifax experian Jan24 TransUnion

Does Car Finance Affect Mortgage Applications?

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.

Will 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.

The importance of credit history and scores

Your credit history is the common link between car finance and your mortgage. Understanding it is key to how car finance affects your mortgage.

Every adult in the UK has a credit file. This is used to make credit checks whenever you apply for financial products. That could be a mortgage, car finance or just a personal loan. Lenders can perform a soft credit check, which doesn’t stay on your credit file. Or credit checks can be ‘hard’, which leaves a mark and can affect your credit score over time.

Checks on your file can include an in-depth credit report, which looks at several different aspects of your credit file. Or it could just be a credit score or credit rating. Credit scores are a rough indication of your standing as a borrower. A poor credit score indicates some issues on your credit report. On the other hand, a good credit rating shows that you’re relatively low-risk to lenders.

Does car finance affect your credit score?

Here’s how credit history links to a car finance agreement or mortgage application:

Both car finance and mortgage lenders will want to check your credit score (and history) before approving your application.
Car finance payments and mortgage payments both impact your credit score over time.

How car finance affects affordability assessments

It’s not just your credit score that impacts your mortgage and car finance. Affordability checks are another key area for mortgage lenders and other finance companies.

What is affordability?

While your credit history indicates your track record of debt repayments in the past, affordability looks at the present and future. In other words, can you afford to make certain mortgage payments or car finance repayments now and over the course of your repayment term?

One aspect of this is your debt-to-income ratio. This assesses how much of your income goes towards debt. In other words, it shows how much disposable income you have left to spend on the likes of mortgage repayments and car finance repayments.

Above all else, affordability checks look at your financial circumstances. Are you a responsible borrower who can comfortably afford the loan repayments you’re agreeing to? This is a key part of the mortgage approval process for a mortgage broker or mortgage lender.

Does car finance affect affordability?

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.

Minimising how much car finance affects your mortgage

To summarise, here’s a short list of ways you can ensure that car finance doesn’t negatively affect your mortgage:

Keep up with car finance payments to avoid late or missed payments that damage your credit rating. This will prevent you becoming a higher-risk borrower for mortgage lenders.
Make sure you can comfortably afford monthly repayments before committing to a car finance agreement. In doing so, you’ll keep a bit of wiggle room when it comes to mortgage affordability, rather than reaching your financial limits.
Pay off your car finance early if you need to improve your affordability to meet monthly mortgage payments. Getting rid of outstanding finance and existing debts means you have more disposable income going forward.

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, start by checking out our free Car Finance Calculator.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

What is a Good APR for Car Finance in the UK?

Car Loan APR Explained

8 Benefits of an Auto Loan Payment Calculator

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

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!

or call 01246 458 810

affordability credit profile credit score debt Mortgage

What Credit Score is Needed to Buy a Car?

An average credit score is generally considered to be 569 or above in the UK. Your credit score is critical to your financial health, and will determine what kind of loans and other services that you’re viable for. But what credit score is needed to buy a car?

We answer this question and detail how My Car Credit can help find the best car finance for you – whatever your score.

How do credit scores work?

Your credit score will fall along a score range, which is generated by a computerised scoring model. The scoring model uses statistical analysis to establish patterns in your credit report data, assigning a three-digit number score. This will in turn reflect on your ‘riskiness’ as a consumer.

Lower scores indicate that you’re more of a risk for lenders. As a result, you may end up paying higher interest rates, fees, and deposits.

The different credit models used by national credit bureaus will calculate and report different credit scores. Below, we list the different categories of credit score based on the Experian average credit score range.

Excellent: Typically, your score would be from 961 to 999 if you sit within this bracket. Having a score this high will streamline your approval process, and you’ll receive the best available terms.

Good: You’ll have a score of 881 – 960 in this bracket, and will likely have better rates offered.

Fair: If your score is in the bracket 721 – 880, you may be considered a subprime borrower, and your interest rates may therefore be slightly higher.

Poor: Between 561 – 720 is a poor score, so you might have loans declined if you sit within this range. Anything lower than this is considered very poor.

Thankfully, there are ways to improve your credit score, so be sure to check these out.

Can I get car finance with poor credit history?

You’ll be pleased to hear that the answer to this question is – yes. There is no specific score required to buy a car. However, as outlined above, the higher your score, the more likely you are to receive a better deal and rates.

That said, we understand that everyone’s case is different, and we treat them as such. We combine a wide panel of over 30 lenders to help you find the right car finance for you.

You can also check your eligibility for credit before you formally apply for car finance. To do so, we’ll carry out what’s called a ‘soft search’ credit check. This involves checking your financial history without exposing the information to lenders. It therefore won’t have any impact on your current credit score.

Contact My Car Credit today

Now you know what credit score is needed to buy a car, you should be feeling much more confident about taking the next steps. However, if you’re looking for car finance but worried about your poor credit, contact our friendly team today to discuss. We aim to address any concerns or queries that you may have about the process – call 01246 458 810 today.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

What is a Good APR for Car Finance in the UK?

Car Loan APR Explained

8 Benefits of an Auto Loan Payment Calculator

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

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!

or call 01246 458 810

car buying credit score Jan24

7 Factors That Can Affect Your Credit Rating

Credit ratings can be complex and at times, extremely frustrating. Even the smallest financial hiccups can leave a lasting footprint on your score. This means that a few missed credit card payments over the years or an outstanding mobile phone debt can compromise your application.

This is why it’s so important to develop a good understanding of your credit rating and the various factors that can affect your score. So, what can affect credit rating? Read on for our guide to factors than can influence your rating, as well as tips on how to boost your score.

Understanding credit ratings

Before we dive in let’s take a look at what credit ratings are and why they matter. Basically, credit ratings are used by prospective lenders to evaluate the overall credit risk of a debtor. Historic financial data is used to predict a borrower’s ability to pay back a debt and calculate the risk of defaulting. A particularly bad credit rating could see some applications rejected. In some cases, it could even rule you out of the lowest rate products.

The latest data from multinational consumer credit reporting agency Equifax reveals just how stubborn credit scores can be. Equifax report that the average Brit is issued with a score of 380. This is considered a ‘fair’ score but is just one point away from the 280-379 category which is considered ‘poor’. The perfect score is 700, suggesting everyday borrowers aren’t necessarily as upstanding as you might think.

Here’s some of the most common factors that can affect your credit rating:

1. Payment history

Keeping up with your credit card payments is one of best ways to build a good credit score. Even making the minimum monthly payment shows lenders you’re a responsible borrower. It also demonstrates that you can commit to a long-term loan. Missed or late credit payments can tarnish your credit score for up to three years. This is why it’s so important to stay on top of your repayments wherever possible.

2. Hard credit inquiries

Carried out by established financial institutions, hard credit checks dig deep into your credit history. They’re used to help creditors make lending decisions. Hard searches are often carried out when applying for larger loans such as mortgages, credit cards and car loans.

While a hard check or two will only lower your credit score by a few points, frequent checks can damage your score and present you as a higher-risk customer. This is because multiple applications suggest you’re chronically short on cash. It could even indicate that you have an irresponsible attitude towards debt. Hard credit checks can leave a mark on your report for around two years. It’s important to consider if you really need one before authorising a full application.

3. Being registered to vote

Lenders will often turn to the electoral roll as a quick and easy way to verify your name and address. Access to government-certified information is also an effective way for lenders to protect themselves against fraud. Failure to register or update your information can affect your credit score by up to 50 points. This can have a significant impact on finance applications.

4. Mobile phone contracts

While mobile phone contracts may seem like a sundry expense, they can have a big impact on your credit score. Like credit card repayments, staying on top of your phone contract is a good way to strengthen your credit score. This is great way of showing lenders that you can commit to a regular payment schedule.

5. Finances of a partner

If you’re married or in a long-term relationship, the finances of your partner will often be factored into your credit score. In some cases, joining forces can strengthen your application. However, if your partner has a ‘thin’ credit history, it may be best to disassociate yourself from them financially.

6. Borrowing percentages

Credit cards can be a good way to build a strong lending history. However, maxing out your cards can have a negative impact on your application. As a general rule of thumb, it’s best to keep your card borrowing below 25%, unless you plan to pay off the full amount every month. This shows lenders you’re responsible and realistic about the money you borrow, and your ability to pay off debt.

7. Utility bills

More than half of major energy providers are now sharing customer data with credit agencies. This makes is essential to maintain good standing with companies such as British Gas and EDF Energy. Utility bills are another good opportunity to establish a good track record with lenders and boost your credit score.

Factors that won’t affect your credit score

We’ve covered some of the biggest factors that will affect your credit score. Now let’s take a look at some of the things that won’t drag you down.

1. Your salary and disposable income

It’s a common misconception that high salaries translate to better credit scores. In fact, lenders are far more interested in how you manage your debts than how much money you earn. For example, an applicant who earns £35,000 a year and pays off their credit card in full every month is far more appealing than an applicant who earns £100,000 a year and has maxed out their credit card and defaulted on several payments.

2. Soft credit checks

While hard credit checks can leave a lasting footprint, their soft counterparts won’t affect your credit rating. What’s more, they can still give lenders a good overview of your credit history. They’re also known as ‘eligibility checks’ and are great for establishing the likelihood of acceptance before committing to a hard check.

3. Previous mistakes

Losing sleep over a mortgage you deferred on several years ago? Stressing about a credit card that got out of control in your twenties? The good news is mistakes you’ve made in the past don’t always stay around to haunt you.

For example, County Court Judgments (CCJ) issued when a borrower fails to repay money will stay on your record for up to six years. The good news is that they will automatically be removed after that period.

Black marks like Debt Relief Orders or Individual Voluntary Agreements (IVAs) can also have a negative impact on your credit score but won’t necessarily stay on your record forever.

Buying a car with poor credit

Need help securing a car loan? Whether you’re struggling with poor credit car finance or simply need assistance getting the best interest rates, we’re here to help. At My Car Credit we offer tailored car finance to applicants with all types of credit histories. Thankfully, this includes those with less than perfect scores. Get in touch today by emailing enquiries@mycarcredit.co.uk to find out more. We’ll help you secure the keys to your new vehicle as quickly as possible.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

What is a Good APR for Car Finance in the UK?

Car Loan APR Explained

8 Benefits of an Auto Loan Payment Calculator

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

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!

or call 01246 458 810

credit rating credit score Jan24

Do Credit Checks Affect Your Score?

Most lenders check credit histories before approving finance, whether it’s for a car loan, mortgage, credit card or even a mobile phone contract. Do credit checks affect your credit score? It depends. Some checks leave a mark on your credit file. Others don’t. Knowing the difference can help you protect your score and improve your chances of approval.

Your credit score influences everything from car finance rates to mortgage offers, so keeping it in good shape matters. If you’re planning a big-ticket purchase, like a city-friendly hatchback for the daily commute or an SUV for long weekends in Snowdonia, understanding how lenders assess your credit history helps you avoid surprises.

At My Car Credit, we use soft credit checks at the start of the finance process, meaning you can check your eligibility without affecting your score. Knowing how soft and hard checks work gives you the freedom to shop for finance options with confidence, without worrying about unnecessary dings to your credit report.

So, how do credit checks affect your score? In this guide, we’ll break down what credit checks are, how they affect your score, and how to minimise their impact, so you can make informed financial decisions without the guesswork.

What is a credit check?

A credit check provides lenders with details on your borrowing habits, repayment records and financial reliability. Car finance companies aren’t the only ones who rely on credit checks to vet applicants. Banks, mortgage providers and other lenders also use credit checks to screen applicants and decide who qualifies for credit and what terms they receive.

Credit scores reflect financial behaviour, with higher scores increasing the chances of favourable rates and flexible repayment options. Patchy records make lenders more cautious, resulting in higher interest rates or smaller credit limits.

Risk vs reward

At the end of the day, it’s all about risk. Lenders don’t run credit checks just for the sake of it. It all comes down to risk. When you apply for finance, whether it’s a car loan, mortgage or credit card, the lender needs to assess how likely you are to repay what you borrow. Your credit score acts as a risk indicator and shows lenders whether you have a history of managing money responsibly or if you might be a higher-risk borrower.

Someone with a long track record of paying bills on time and keeping debts under control is seen as low risk, which often leads to better interest rates and borrowing terms.
On the other hand, if a lender sees missed payments, frequent applications, or large outstanding debts, they may decide you’re a higher-risk borrower, which could result in higher interest rates, lower credit limits, or even a declined application.

But how do credit checks affect your credit score? That depends on the type of check being performed. A soft check won’t leave a mark, but a hard check can temporarily reduce your score, especially if multiple applications are made in a short period. This is why lenders use both types of credit checks to build a full picture of your financial behaviour before making a decision.

It might feel frustrating at times but it’s ultimately about making responsible lending decisions. The goal? To make sure you don’t end up borrowing more than you can realistically afford.

How do they source the information?

When you apply for finance, lenders don’t just take your word for it. They turn to credit reference agencies (CRAs) for a full picture of your financial history. These agencies hold detailed records about your borrowing behaviour, which lenders use to assess how reliable you are as a borrower.

In the UK, the main three are:

Experian
Equifax
TransUnion

What information do CRAs have access to?

Credit reference agencies pull data from multiple sources to create a credit report. This includes:

Your credit accounts – Loans, mortgages, credit cards, store cards, overdrafts and even some utility bills.
Your repayment history – Whether you’ve made payments on time, missed any or defaulted on a loan.
Your total outstanding debt – How much you owe across different credit products.
Credit applications – Any past applications for credit, including hard credit checks.
Electoral roll information – If you’re registered to vote at your current address, which helps verify your identity.
County court judgements (CCJs), bankruptcies and IVAs – Basically, any legal action related to unpaid debts.
Financial associations – If you have a joint account or a financial connection with someone else, their credit behaviour could affect yours.

What is a good credit score? Understanding the differences between CRAs

Credit scores aren’t one-size-fits-all. Since the UK has three major CRAs (Experian, Equifax and TransUnion) you don’t have just one credit score, but three different ones. Each CRA uses its own scoring system, meaning what number counts as a “good” score with one agency might be “fair” with another.

Credit score ranges by CRA

Rating	Experian (0-999)	Equifax (0-1000)	TransUnion (0-710)
Excellent	961 – 999	811 – 1000	628 – 710
Good	881 – 960	671 – 810	604 – 627
Fair	721 – 880	531 – 670	566 – 603
Poor	561 – 720	439 – 530	551 – 565
Very Poor	0 – 560	0 – 438	0 – 550

Each CRA scores differently because they pull slightly different data and weigh factors differently.

For example:

Experian’s top score is 999, while Equifax goes up to 1000 and TransUnion stops at 710.
A “good” Experian score starts at 881, but with Equifax, you’d need at least 671.
A score of 650 might be “poor” with Experian but “fair” with Equifax.

This means that scores aren’t standalone. To be properly interpreted it needs to be clear what CRA they’re issued by.

Is it all legal? Is my privacy being invaded?

It’s natural to wonder if all this information sharing is legal or a breach of privacy. The good news is that CRAs operate under strict UK data protection laws, including the Data Protection Act 2018 and the UK General Data Protection Regulation (UK GDPR).

Here’s what you need to know:

You must give consent – When you apply for credit, you agree to a lender checking your file.
You have a right to access your report – You can request a copy of your credit file from any of the CRAs for free.
Lenders can’t see everything – Personal details like your salary, bank account transactions or savings balance aren’t shared with CRAs.

Credit reference agencies hold a lot of financial data, but they don’t make lending decisions. They simply provide the information that lenders use to assess risk. That’s why different lenders may offer different terms, even if they’re looking at the same credit file.

If anything on your report looks incorrect or unfair, you have the right to challenge it and request a correction. Keeping an eye on your credit file ensures that everything lenders see is accurate and up to date.

Soft vs hard checks

Credit checks fall into two categories – soft checks and hard checks. Understanding the difference helps borrowers avoid unnecessary dips in their score. More information on whether credit checks affect your credit score below!

What is a soft credit check?

A soft credit check is a preliminary review of your credit file without leaving a visible mark on your credit report. Lenders use them to assess eligibility before a full application.

When are soft checks used?

Comparing car finance options (like with My Car Credit)
Checking eligibility for loans, credit cards or insurance
Landlord or employer background checks
Pre-approved credit offers

What does a soft credit check show?

Soft checks provide a basic overview of financial behaviour, including:

Existing credit accounts like loans, credit cards and mortgages.
Repayment history – A record of on-time or missed payments.
Creditworthiness – A broad assessment of financial reliability to determine eligibility for specific financial products.

Impact on credit score

Do soft credit checks affect your credit score? Soft checks do not reduce credit scores, and they aren’t visible to other lenders. Only the person checking their own report can see them. This means that researching finance options or checking eligibility through a service like My Car Credit (which kickstarts the application process with a soft search) leaves no trace.

In a nutshell: Since soft checks aren’t linked to an actual credit application, they don’t signal to lenders that you’re actively seeking new credit. That means you can shop around for a good deal without worrying about your score dropping.

What is a hard credit check?

Hard credit checks go deeper into financial history and leave a permanent mark on your credit file. Lenders use them when deciding whether to approve a formal credit application.

When are hard checks used?

Car finance or hire purchase agreements
Mortgage or personal loan applications
Credit card approvals
Setting up a mobile phone contract or utilities

What does a hard credit check show?

A full credit check provides lenders with:

All open credit accounts and outstanding balances
A full repayment history, including any late or missed payments
Previous credit applications
Any county court judgements (CCJs) or bankruptcies

Impact on credit score

How do credit checks affect your credit score? Each hard credit check can cause a small dip in a credit score, typically between 5-10 points. One or two hard checks spread out won’t cause much trouble, but frequent applications in a short space of time suggest financial difficulty and can make lenders wary.

How much does a hard credit check lower your score?

Each hard check can reduce your score by 5–10 points.
The effect fades over time, usually within a few months.
Too many checks within a short period can lead to bigger drops.

In a nutshell: If you’ve applied for one credit card and a car loan over six months, this won’t raise concerns. If you’ve applied for five loans, two credit cards and a mobile phone contract in a single month, lenders may assume you’re struggling financially.

How do soft and hard credit checks differ?

Feature	Soft credit check	Hard credit check
Visible to other lenders?	❌ No	✅ Yes
Affects credit score?	❌ No	✅ Yes (small impact for one or two applications. More for frequent applications.)
Purpose	Pre-approvals, background checks	Formal credit applications
Examples	Checking car finance eligibility, comparing deals	Applying for a mortgage, credit card or personal loan

The final verdict? Soft checks work best for shopping around, while hard checks confirm final finance agreements. Make sure you check what type of credit check will be carried out before you send off an application.

Why do lenders perform credit checks?

Lenders check credit histories to:

Assess creditworthiness – Scores are used to determine how reliable a borrower is.
Review repayment history – Ensure a track record of managing debt well.
Verify financial stability – Confirm that repayments can be met and make sure applicants don’t bite off more than they can chew.
Decide loan terms – Results are used to set interest rates and repayment amounts.

A strong credit score often leads to lower interest rates and better borrowing terms, just as a clean driving record reduces insurance premiums.

How does a credit check affect your credit score?

Do credit checks affect your credit score? The impact of a credit check depends on whether it’s a soft or hard check. Some checks are harmless. Others can cause a temporary dip in your score, especially if too many appear in a short space of time.

How to reduce the impact of hard credit checks

Hard credit checks are sometimes unavoidable, like when applying for car finance, a mortgage or a loan. Lenders need a full picture of your financial history but that doesn’t mean they have to drag your score down unnecessarily. With the right approach, you can minimise their impact and keep your credit profile in good shape. Here’s how:

Space out applications – Avoid making multiple credit applications in a short period.
Use soft checks first – Services like My Car Credit’s eligibility check provide finance options without affecting credit scores.
Apply for credit only when needed – Reduce unnecessary applications to keep your score healthy.
Check credit reports regularly – Identify and fix any errors that might be holding your score back.
Plan major purchases – If you’re applying for a mortgage or car loan, avoid smaller credit applications beforehand.

Managing credit applications wisely helps maintain a strong score while still securing the right finance deal.

Frequently asked questions

Do soft credit checks affect your credit score?

No. Soft checks aren’t visible to lenders and don’t lower credit scores.

How many hard credit checks are too many?

Lenders worry if multiple applications appear in a short time. Space them out where possible.

Can I see who performed a credit check on my report?

Yes. Credit reports list all soft and hard checks, along with the date they were performed.

How long do hard credit checks stay on a credit report?

Most remain for 12 months, but their effect reduces over time.

What should I do if my credit score drops after a hard check?

Avoid new applications, keep repayments on track and let the score recover naturally.

Find car finance without putting your credit score on the line

Shopping for car finance? My Car Credit applications start with a soft credit check, meaning you can explore finance options without affecting your score. As your application progresses, lenders may then perform a hard check to process the finance agreement. Apply online today and find a deal that works without leaving a mark on your credit file.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

What is a Good APR for Car Finance in the UK?

Car Loan APR Explained

8 Benefits of an Auto Loan Payment Calculator

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

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!

or call 01246 458 810

credit check credit score Jan24 poor credit

Can I get car finance without a credit check? (a complete guide)

Man using phone to check for car finance without credit check

If you want to apply for car finance but suspect you may have a poor credit profile, or no credit history at all, you may be wondering “Can I get car finance without a credit check?”. You may be surprised to know that all regulated lenders perform credit and affordability checks as part of their commitment to responsible lending. However, this shouldn't put you off applying. There are plenty of car finance packages for those with less than perfect credit history. It is also possible to check your car finance eligibility using soft search.

No credit check car finance

If you have bad credit or even no credit, you may be searching for car finance options where you will not get a credit check. The reality is that all lenders will want to check your credit history before they loan you money.

Anyone searching for no credit check car finance will be disappointed. However, this is nothing to be worried about and there may still be options for financing a reliable car or brand-new vehicle.

Why do lenders do a credit check?

When you apply for car finance, lenders do credit checks as part of the application process to understand your financial behaviour and assess your history of handling your finances. They will be assessing your ‘creditworthiness’, or your suitability to receive financial credit. This is often based on how reliable you have been at paying back money in the past – your credit history.

Finance lenders have an obligation to lend money responsibly. It can be frustrating knowing that your finances and credit score will be scrutinised. However, this ensures that you are not lent more money than you can afford (called ‘affordability’). It also confirms that the car finance product you are sold is suitable for your circumstances.

Whilst there are some payday lenders who will offer finance without a credit check, you will be charged enormous rates of interest to accommodate the increased risk of lending. This is likely to be unaffordable for larger loans, such as buying a new or even used car.

By having a credit check done, this makes sure you are offered the correct rate of interest for your financial situation, rather than over-paying for a car finance deal.

Soft search versus hard search

When shopping around for car finance, customers can be concerned about damaging their credit scoring through multiple hard searches.

To avoid this happening, and to make it easier for you to shop around, we only do a soft credit check when you first apply. This allows us to do preliminary background checks to establish your eligibility for car finance.

The important thing about a soft credit check is that it doesn’t show on your credit file. The result is that they don’t impact on your credit score, nor do they affect your future chance of securing credit. You can have as many soft searches as you like, and only you can see them on your report. So, in some ways, this can be seen as no credit check car finance – although a hard search is required further down the line.

After a soft check, a hard search happens when you have confirmed that you are eligible for car finance and are happy to proceed with your application.

Be aware that a hard credit check will show on your credit file. It is worth bearing in mind that too many hard credit checks over a short period of time can affect your future ability to secure car finance – or any other type of finance for that matter. The reason for this is that they tell lenders about credit applications, and therefore may be a higher risk.

One of the great things about using soft search first is that you can establish your eligibility for car finance before you move ahead with a full search. When you then go on to secure car finance, so long as you keep up your repayments, you may actually improve your credit rating. You can even repair your credit file if it is damaged!

When you apply for credit or a loan, the lender will perform a credit check (sometimes called a credit search). This means that they can look at the financial information held on your credit report.

A credit check will show information such as:

Your name and date of birth.
Your current and previous addresses.
Whether you are on the electoral register.
Your credit accounts, including bank and credit card accounts, outstanding loan agreements or utility company debts. Late or default payments will show and stay on your credit report for at least six years.
Financial associations. These are people you are financially linked with through joint credit.
Public record information. This only covers bankruptcy, since civil judgments and tax liens were removed from any credit check in 2018.
County Court Judgments (CCJs), bankruptcies and individual voluntary arrangements (IVAs). These stay on your report for at least six years.
Banks and building societies. Only your overdraft is shown, not your bank statements, balances or savings.
Any convictions of fraud, or if someone has stolen your identity and committed fraud.

Details such as salary, religion, or criminal convictions (other than fraud) are not included.

How can I check my credit score?

You may want to check your credit history before you start applying for car finance. When checking your credit score, you won’t leave a mark on your file and it can help you understand what lenders will see.

Checking your credit history is also a great opportunity to improve your credit score by ensuring that all information held on you is correct and up to date. For example, ensuring that out-of-date financial associations don’t have a negative impact on your credit score.

Your credit score is an indication of the health of your credit file and is usually scored out of 1000. The higher the score, the better your credit rating.

There are three main credit reference agencies in the UK – Equifax, Experian, and Transunion (formally Call Credit). They hold financial information on you and are governed by the Information Commissioner’s Office or ICO.

Websites like Experian allow you to access your credit score for free.

Who will finance a car with a bad credit file?

My Car Credit has over 30 lenders on its panel and so the chances of getting you an acceptance are increased (although cannot promise guaranteed car finance). However, even people with really bad credit can get car finance, so don’t lose hope!

We have lenders that specialise in car loans for customers with damaged or poor credit. Where we match you with a lender, you will usually have to pay a higher interest rate, as you represent an increased risk for the lender. Of course, you can pay off your loan faster if you wish, and this can help to repair your credit file.

It can be helpful if you put down as large a deposit as you can afford and keep the repayment term shorter. However, it’s important not to overstretch yourself on your monthly payments.

Using a Guarantor Loan to finance a car

You may find a Guarantor Loan to be a suitable option. This is a loan where a third party that you trust (usually a family member or close friend) guarantees to make the repayments on a car loan if you fail to. Do bear in mind that you do remain responsible for the car finance agreement.

Please be aware that if you fail to make the repayments, your guarantor will become liable. If your guarantor fails to make the payments, you could both be issued with CCJs, which would affect both your abilities to obtain credit in the future.

Whilst Guarantor Loans are a great way for someone with impaired credit to get car finance, they should not be taken lightly as they come with great responsibility. You can watch a video and read more about Guarantor Loans for car finance.

How can I improve my credit score?

Another option if you have a bad credit history is to work to improve your credit score over time. The good thing about poor credit history is that it isn’t permanent. While the most scrupulous lenders might check further back for poor credit history, most details about missed payments and even court judgements won’t affect your credit status after six years.

This won’t help for car finance in the here and now, but it will make any future car finance application a little easier. Not least because you’ll be less worried about a credit check. The good news is that car finance is one of the ways to improve your credit score over time. That’s because you’ll be showing you can pay back a car loan with regular monthly payments.

Here are some other steps you can take:

Join the electoral register

If you haven’t already, you should ensure your details are on the electoral roll. Why? It’s a simple way for many lenders to check your identity and address as part of a credit check.

Check details are correct

You could also improve your credit rating by ensuring credit reference agencies have the right details for you. There are three main credit reference agencies in the UK – Experian, Equifax and TransUnion. They hold information such as your address history and financial history – accounts, payments, and any defaults or IVAs.

You can see all of this information on a credit report. If you find any discrepancies, you can report them to the agency in question, who will investigate and potentially update their records. Correcting these issues could improve your poor credit score.

Stay in the same home

Constantly changing addresses is a tell-tale sign of applicants with bad credit. In contrast, keeping the same address shows stability and security to a lender, which could improve your credit score.

Be smart with spending

If you’ve been refused credit, there’s no better way to move towards good credit history than spending wisely. Staying well within your credit limit will show that you’re responsible with your money, showing other lenders that you’ll be able to keep up with payments – and minimise the risk of late payment.

Pay off your debt

Even soft credit checks will show if you have outstanding debt. This is a big red flag for most lenders and car finance companies because it shows that your current financial situation is unsustainable. As well as spending less, try to improve your current circumstances by paying off outstanding debts. This could take you one step closer to a new car in future.

Here to help

With no credit check, car finance can’t be processed. But hopefully, we’ve shown you that credit checks are nothing to be worried about. It is more than possible to check your eligibility for car finance before you have a hard credit check. What’s more, credit checks simply ensure that lenders loan you the right amount, at the right interest rate for your circumstances.

Whilst there is no such thing as ‘no credit check car finance’, we hope we’ve helped you feel more confident about applying for car finance to buy your next car!

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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!

or call 01246 458 810

bad credit credit check credit score experian Jan24 no credit poor credit

Is there such a thing as guaranteed car finance?

Man signs agreement for buying car on finance

Put simply – no. Just as there are no guarantees in life, there are no guarantees in car finance. As such, we would advise you to be very wary of any company that suggests they can guarantee car finance to you. At My Car Credit, we don't offer any guarantees. However, we always do our absolute best to get you accepted for car finance, so you can buy the car that you want.

The truth about Car Finance & ‘guaranteed car finance’

The reality is that the ‘guaranteed car finance’ claim is often a marketing ploy. The goal is to make you think that you’ll definitely be able to get a loan regardless of your circumstances. If companies offer guaranteed car finance, they think they’ll attract more customers. And they usually do – often people with a poor credit rating.

In truth, guaranteed car finance simply doesn’t exist. In fact, there have been laws in place since 2010 which state that making a false or misleading claim around finance guarantees for consumer credit is an offence. Additionally, advertisements that contain just the phrase ‘loan guaranteed’ are also banned. The advert would need to include terms and conditions regarding the individual’s credit status to be allowed.

‘Guaranteed car finance’ schemes

Found a few companies that offer guaranteed car finance? Despite what we’ve said above, there are some providers offering what they call guaranteed car finance. Some finance companies will offer guaranteed car loans to reel in vulnerable customers, without any actual guarantee. Other lenders will create some sort of false guarantee and claim that it amounts to guaranteed car finance.

Whatever the case, watch out for ‘guaranteed car finance’ schemes which are designed to catch you out. A common scheme is to ask for a ‘guaranteed car finance enquiry’ fee. Usually this fee and the offer it is meant to guarantee are closely attached to complex small print (i.e. legal jargon). In order to decipher it, you’d need to be a qualified lawyer!

Any finance lender suspected of dealing with customers in this way can end up with a full Financial Conduct Authority (FCA) investigation into their conduct. If upheld, this could lead to them being fined or forced to close.

They’ll carry on for as long as they can get away with it. But when they get caught out, there’s rarely any compensation for customers with a bad credit history, who have been irresponsibly sold car finance – usually with sky-high monthly repayments. You’ll find that your personal circumstances are even worse, giving you less chance of improving a bad credit score.

In summary – almost every guaranteed car finance claim is a scam.

How car finance agreements really work

Car finance agreements are purely based on your individual circumstances and your credit profile. This means that there will inevitably be some individuals who aren’t eligible for car finance – hence why guaranteed car finance doesn’t make sense.

We’ll go out of our way to help you get approved for car finance, including bad credit car finance. However, it’s our lenders that have the final say on your car finance application after fully assessing your current financial situation, affordability and credit profile.

A credit profile is a document that contains information regarding your creditworthiness and credit history. Your credit profile includes: what types of credit you hold, the length of time your credit accounts have been open for, if you made your repayments on time, and any applications for new credit.

Lenders are far less likely to lend you money if they are not convinced you can repay them. This would naturally be bad business for them. In addition, it is not ethical for them to lend money that could push you into financial difficulties. So, it’s paramount they only offer car loans if they believe you can afford the monthly payments.

How to get accepted for car finance

Whilst we cannot offer guaranteed car finance, there are ways you can improve your chances of getting accepted for car finance for a new car, whatever your credit history.

Improve and maintain your credit score
Your credit score is the main factor that is assessed when you apply for a car loan. It reflects your ability to keep up with monthly repayments. This means it’s important you keep your score as high as possible. There are many things you can do to improve your credit score. Not only will a good credit score improve your chance of an acceptance but you will also get a better rate. However, don’t lose heart if you have a low credit sore as there are still plenty of options.
Put down a deposit on your car loan
Paying an upfront deposit on your car loan makes you less of a risk to the lender. For bad credit car finance, there may be a larger deposit required. Not only is the amount owed on the vehicle reduced but your monthly payments will also come down. Once again, don’t despair if you can’t pay a deposit. There are plenty of no deposit car finance options available!
Opt for a Guarantor Loan
A Guarantor Loan is where a third party (usually a family member or close friend) agrees to pay your loan if you are unable to. This lowers the risk for the lender, as it’s essentially guaranteed car finance on their end, improving your chances of acceptance. It can also lower the interest rates you are offered. Guarantor Loans are a big responsibility for both parties and shouldn’t be entered into lightly. Make sure you are clear on how a Guarantor Loan works before proceeding.

What we can offer

My Car Credit has access to a large panel of lenders. These have all been vetted and approved by the FCA for their trustworthy operations and the quality of their service.

Our large network of lenders increases the chances of you getting accepted, across all credit profiles (from poor to excellent). Our unique underwriting policy prioritises the best outcome for you, the customer. This ensures we give you the best available deal on car finance for your circumstances.

You can trust My Car Credit because we are part of Evolution Funding, the UK’s largest vehicle finance broker. We are proud to be award-winning market leaders in the industry. We have helped thousands of customers get the car they want; at the price they can afford. We are also regulated and monitored by the Financial Conduct Authority (FCA). In conclusion, you can borrow for your next car safe in the knowledge that we are professional and reputable.

What about bad credit car loans?

At My Car Credit, we understand that some applicants have a poor credit history. That’s why we don’t just turn down drivers because of a poor credit score. As a leading UK car finance company, we aim to offer car finance packages to as many people as we can.

Unlike traditional lenders, we have a network of over 30 companies. Our team will work tirelessly to compare your car finance options and find the right deal despite a bad credit score. Whatever your credit rating, our goal is to offer you a car finance agreement with monthly payments you can afford.

If you have any questions, our Car Credit specialists are here to help. Finally, you can get an instant decision, that won’t affect your credit file, by applying today.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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!

or call 01246 458 810

car finance agreement car finance eligibility credit score guaranteed car finance Jan24

Can I Get a Car Loan with a Poor Credit Score?

Car driving bought with a low credit score loan

It’s common for lenders to carry out a credit check on anyone who applies for a car loan. This is usually a ‘soft search’ initially. Credit checks can lead to those with poor credit scores shying away from applying due to the fear of rejection. However, you’ll be surprised how easy it is to successfully obtain a loan by making a few minimal changes.

In this short guide, we’ll explain everything you need to know when applying for a car loan with poor credit. In addition, we’ll cover how to get the best deal by ensuring your credit score is up to scratch.

What is a car loan?

Finding the right car within your price range can be a challenge. But, with a car loan, you can spread the payments out over a course of several months or years. This is a great way of significantly increasing the options available to you.

Two popular forms of car loan are a personal loan and Hire Purchase (HP). A personal loan will see someone borrow money from a lender, bank or building society. This allows them to have instant ownership of a car. In contrast, HP will have the individual pay an initial deposit (not always required) with fixed monthly payments for the next three to five years. They effectively hire the vehicle over the period, with the option to purchase at the end.

At the end of the term, they will be offered three choices; to either return the car to the supplier, keep it, or trade it in for a replacement. However, you must be careful not to miss the repayments before the end of the term. In these cases, the finance company may decide to repossess the vehicle to settle the debt.

How can you improve your credit score?

A lender will perform a credit check to ensure that the person applying can afford the monthly payments. People who obtain an excellent credit score will have demonstrated a firm grasp of their finances. In theory, this makes for a reliable choice for lenders.

Those described as having a ‘thin’ credit history will have a history of missing payments. Alternatively, there may be little concrete evidence of financial security, such as never owning a credit card or bank account. A higher credit score will open more doors. This could include a much more comprehensive range of car loan options. These are often accompanied by much more favourable interest rates.

Here are some simple but effective ways of raising your credit score.

1. Identify the problems in your credit report

Before you apply for a car loan, it will be wise to get a free copy of your credit report. This will give you an idea of any pitfalls that may scupper your loan request. There may be some glaring mistakes you are making in the way you handle your money, damaging the profile. It is also worth ensuring it is up to date and doesn’t contain any errors or inaccuracies which could unfairly affect your score.

2. Apply for a credit card and use it sensibly

Credit cards have a strange reputation of being a poor way to save money. But the truth is that as long as you’re making repayments on time, they will put you in good stead to improve your credit score. Proof that you can budget and regularly meet repayment deadlines will help you secure a more competitive car loan deal.

3. Stay away from bad credit

If you’ve ever been financially linked with someone you know has bad credit, such as a joint account or shared mortgage, it may lower your credit score. If this is the case, it will be a good idea to issue a notice of disassociation. This informs lenders that you are no longer financially linked and should be judged on your own merit.

4. Settle any loans

Now is the time to settle those loans and reduce your debt as much as possible. This is easier said than done, but to get behind the wheel of the car you desire you may need to work at it.

What are my other options for obtaining a loan?

Start by crunching the numbers on a car loan calculator. You may consider making slight changes to the car loan variables to see how it can help. No matter how low your credit score, some changes can ultimately work in your favour to help you get a car with poor credit history.

1. Pay a larger deposit

Simply put, a larger up-front deposit will mean your monthly payments will be reduced. This in turn minimises the risk for the lender in ensuring they are met. It can be frustrating as you’ll be forking out a potentially huge chunk of money. That said, it is often a sure-fire way to improve your chance of getting the deal.

2. Pay a higher interest rate

Someone with a low credit score will often need to accept a higher interest rate than the advertised representative rate. Again, it may seem frustrating on the face of it. However, don’t despair as it tends to mean only a slightly higher monthly payment.

3. Choose a lower annual mileage limit

Opting for a lower annual mileage limit can result in much lower costs month to month. This is because the car will be worth much more to the dealer at the end of the loan. This is usually related to fewer miles on the clock and less wear and tear.

However, you will want to keep the figure realistic. Going over your allowance will end up costing you dearly. You will find that there are harsh penalties that charge you for every extra mile taken.

4. Choose a used car

Opting for a loan on a used car will ultimately see you borrowing less money from a provider. This improves the possibility of obtaining a loan, even with a poor credit score. There is much less risk for the dealer as the car will already have depreciated in value. However, this doesn’t deflect from the fact that used cars are mostly reliable and of good quality.

If you worry about being able to afford to buy a car, this may be the best and most sensible option.

Need help getting a car loan with a poor credit score?

Take the headache out of getting a car loan with a straightforward and simple chat with our friendly specialists. Find out more about how we can find the right deal for you no matter how your credit score may look.

You’re not in this on your own, and we’ll support you every step on the way to get you on the road with the car of your dreams. Give us a call on 01246 458 810 or email enquiries@mycarcredit.co.uk to find out more

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

PCP vs HP – What’s the Difference Between Them?

What is a Guarantor Loan?

No Deposit Car Finance – How Does it Work?

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

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!

or call 01246 458 810

car loan credit score Jan24 poor credit

Car finance can be a fantastic way to secure the keys to your dream ride. However, it’s not uncommon to be refused the first time around. There are all kinds of reasons why you may have been refused car finance, some easy to overcome and others a little more complicated.

Step 1: Understanding why you were refused car finance

Step 2: Enlisting the help of experts

Step 3: Improve your chances of a car finance agreement

Securing car finance with poor credit history

Rates from 9.9% APR. Representative APR 10.9%

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Can I get car finance at 18?

What’s the best car finance option for young drivers?

Can a student get car finance in the UK?

Do young drivers need a guarantor?

What credit score do I need for car finance?

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