What Credit Score is Needed to Buy a Car?
Depending on the lender and the specific type of loan which you are applying for, your necessary credit score will vary. Generally, a higher credit score will give you access to better loan terms and lower interest rates.
A good credit score in the UK is typically considered to be above 700, according to Credit Karma. If your score is in this range, you’ll likely have a wide range of finance options available to you.
However, even if your credit score is lower, you may still be able to secure a car loan. For instance, some lenders specialise in offering auto financing to individuals with poor credit scores. However, it is important to note that these loans will come with high interest rates.
Factors That Impact Your Credit Score
Several factors can impact your credit score. The two most significant of these factors are your payment history and credit utilisation.
Your payment history refers to how consistently you’ve made timely payments on your previous loans or credit cards, with lateor missed payments significantly damaging your credit score.
Credit utilisation is the percentage of your available credit that you’re currently using. Remember that high credit utilisation can indicate that you’re over-reliant on credit, which can lower your score.
Other factors lenders consider are your total existing debts, any past payment problems, whether you’re on the electoral register, and if you have any court judgements.
One important way you can directly influence your credit score is to register to vote and get added to the electoral roll.
As lenders take being on the electoral register as a sign of financial stability, registering has the potential to improve your creditworthiness. Electoral roll data is used by credit agencies when calculating your score.