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 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:

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.