Credit Scores and Car Finance
Your credit score is a key component when it comes to applying for car finance. Lenders will perform a credit check based on your payment history and credit account performance. From this they can decide whether to approve the credit you have applied to borrow from them and at what rate of interest.
If your rating suggests to the lender that they're dealing with a person who has a chequered financial past then you can expect one of two things: either your application will be rejected or you'll end up paying a rate of interest that is over the odds compared to a person with a strong credit score.
Why a good credit score matters
In the field of car finance and car loans, a strong credit score will, as a broad rule, secure you a deal with an interest rate of around 3.3%.
With a mid-range credit rating you should anticipate paying a higher rate of interest, something in the region of 4.5%.
If you possess a poor credit score then, depending on how low it is, you're going to get hit with an interest rate between 6.5% and 13%. So as you can see, a strong credit score can save you hundreds of pounds - on car deals and lots more too.
Get a head start
Viewing your credit report and obtaining your credit score before you apply for car finance is therefore vital. By taking this step, you'll gain a strong indication of the sort of finance deals lenders are likely to offer, allowing you to plan accordingly.
And in terms of the bigger picture – in other words, your eligibility for other forms of finance, like credit cards and mortgages – it makes complete sense to view and monitor your credit score. This is because the more you're able to grow it, the more favourable your financial future will start to look.
Improving your credit score
If you're interested in viewing a free credit report then sign up to MyCreditMonitor today and take advantage of our 30-day free trial. Get unlimited access to your personal credit score and view your free credit report online 24/7.
If you're serious about improving your credit score and taking advantage of the full range of financial benefits this could bring – including getting access to better car finance deals – then get started today by requesting a free credit report.
Finding out what your credit score is, and planning how you can improve it, is the first step to lasting financial freedom.
What's Your Credit Score?
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