What credit score is needed for car finance?

What credit score is needed for car finance?

There is no definitive minimum credit score requirement to get approved for car finance when buying a car. However, the relationship between credit score and car finance is important and getting car finance with a low credit score will be more difficult.

When considering any form of credit including credit cards, mortgages, personal loans, as well as car finance, your credit score will determine success and cost of that finance. This is because lenders will review your credit score when making a decision on your credit application.

When you apply for a car loan, the lender will look at your credit history to determine whether offering you credit is a risk. While a higher credit score is universally more beneficial, there is no definite credit score that you need to get approved for car finance as each lender will score you differently.

What credit score do you need for car finance in the UK?

There is no minimum credit score required to be approved for car finance for a number of reasons:

– Different finance providers will use different third-party credit reference agencies to retrieve your credit score. A person’s credit score will be different across providers as their scoring systems are unique.

– Finance providers like Go Car Credit specialise in providing car finance to people with a poor credit score therefore take into consideration many other details. This means we can consider applications in detail where other lenders may have refused finance based on credit score alone.

This means that having a low credit score does not mean you can’t obtain car finance, but also that having a high credit rating doesn’t guarantee you will be approved for car finance. However, having a better credit score will increase the likelihood your application is successful, and may lead to being offered better terms.

So what is a low, medium, and high credit score? For reference, here are the credit scoring systems and categories used by the three main credit reference agencies:


  • 961 – 999 = Excellent
  • 881 – 960 = Good
  • 721 880 = Fair
  • 561 – 720 = Poor
  • 0 = 560 = Very Poor

Trans Union

  • 850 – 781 = Grade A
  • 780 – 720 = Grade B
  • 719 – 658 = Grade C
  • 657 – 601 = Grade D
  • 600 – 300 = Grade E


  • 800 – 850 = Excellent
  • 740 – 799 = Very Good
  • 670 – 739 = Good
  • 580 – 669 = Fair
  • 300 – 579 = Poor

What is credit score and why is it important when taking out car finance?

Simply put, your credit score represents your creditworthiness – how likely you are to be a valuable customer to an organisation offering you finance. Credit reference agencies use the information in your credit report to determine your score. This report includes information on any financial/credit agreements you have had in the past, whether you regularly paid on time or not, and other information related to your financial standing.

A higher credit score will mean less risk to lenders while a lower score represents more risk to lenders. It is one of the biggest factors in determining your success when applying for finance as well as the terms of any finance product offered.

This extends to most forms of lending including car, property, and other forms of lending. Because credit scores can have such a drastic impact on your financial decisions, it is very important to nurture and take care of your credit report.

How can I check my credit score?

It’s quick and easy to check your credit score using one of financial service providers e.g. Experian, Clearscore, and Credit Karma. Credit Karma is part of TransUnion Information Group and it’s TransUnion that provides your credit report.

All that is required is some personal information and details on your current finances and a score will be provided. The score itself is displayed as a 3-digit number representing how healthy your credit report is. These services can also help identify how to improve your rating.

At Credit Karma the credit scores are out of 710 and they rate people on a scale of 1-5.

Once you are setup, the credit file provider you have chosen will often provide useful services such as letting you know when credit checks are made on your name and when new financial links between yourself and other parties have been added to your credit profile.

How does my credit score affect my car finance application?

As well as playing a role in the decision-making process of your car finance application, your credit score can affect the cost of your finance agreements.

This comes in the form of the APR (annual percentage rate) you are charged on the loan. This is the price of the finance – what you pay back in addition to the amount borrowed.

If you have had bad credit in the past, you may be seen as a higher risk of not repaying the loan on time. You may be charged a higher rate for the cost of borrowing, compared with if you had a higher credit score and no missed payments.

Here at Go Car Credit we have 3 different APR products available. The type of product you get will be allocated by our underwriting team once they have done an initial review of your application and carried out a soft search on you. Once you are a customer of ours your interest rate is fixed for the duration of your agreement and means you will pay the same amount each month for the specified loan term and won’t get any nasty surprises.

How to repair your credit score before taking out car finance?

Generally, building credit score is a long-term activity as the purpose of a credit score is to evaluate all your financial behaviour over a long period of time. In the short-term, there are certain things you can do to ‘boost’ your score if you are expecting to make an important credit application soon such as for car finance.

These include:

  • Register on the electoral roll. This shows that you’re settled in the area you live in.
  • Try to make sure you keep all outstanding debt payments up to date and on time.
  • Limit the number of ‘hard’ credit checks that are conducted for you – these usually occur whenever you make an application for a form of finance, or sometimes even when you are just checking eligibility. If the organisation you are engaging with does not clearly state the check is a ‘soft’ credit check then be selective as to whether to proceed.

Does car finance improve credit score?

As your credit score is primarily based on your track record of being a good borrower, then having car finance can positively impact your credit score.

As with any other form of finance, it’s important that you meet your obligations with regards to making your scheduled car finance repayments.

You can get an idea of timings and how much this could all cost when you use our car finance calculator. This will help you plan out what sort of deal you could get for your car with us, along with a timetable of payments. Keeping to this payment schedule could help make a difference to your credit score.

How long can it take to improve credit score?

Improving your credit score from where it is today could happen as quickly as a few weeks but significant changes are likely to be the result of a much longer-term pattern of good financial behaviours.

Quick checkbox-type activities such as ensuring you are on the electoral register can provide an immediate boost. Furthermore, reviewing and removing any misinformation that may be present on your credit profile has potential to impact your score significantly in the short-term.

Beyond these short-term activities, improving your credit score will take many months or years. The more financial agreements you participate in and pay on time the better your score will be.

What else does Go Car Credit check when applying for finance?

Other than a review of the applicant’s credit score we will review other factors. These include:

  • Check customer meets minimum criteria such as employment type and has a minimum income of £1500 per month.
  • Check we have sufficient address and job history that covers up to 3 years.
  • Complete income verification to determine which proof of income we may require – this could be wage slips or bank statements.

Find out more information on our car finance approval process.

Income and affordability

As an ethical lender, it is important that we are lending responsibly to our customers. This means affordability is a key factor that we review when making decisions on lending to our customers. We will review our customer’s income against the following criteria:

  • Their current outgoings such as rent or mortgage.
  • Current credit commitments such as credit card repayments and any loans.
  • Day to day spending.

We will look at how much our customer could afford to pay each month on car finance and ensure this is affordable in the long term.

Any outstanding debt

We will look at our customers current credit commitments as these will have an impact on affordability but also, we will review how the customer is managing these credit commitments. If the applicant has recent defaults, it would not be responsible to lend more to them as they are showing signs of instability.

If you are looking to take out credit in the near future, we would strongly advise you are up to date with current credit commitments and, if you are not, it may be a good idea to work on getting these up to date and then look to apply for credit in the future.

Additional Checks

There will be additional checks that form part of the application review process. These could include a review of your employment and income history.

Lenders like to see stability in employment history. If you are continuously switching jobs, then you may be viewed as a higher risk to lenders as there may be gaps in employment which may mean gaps in income which could cause problems when managing finances. If you are self-employed and your income is inconsistent lenders may see this as a higher risk as you may not earn enough one month to cover your outgoings. As a specialist in providing car finance to people who are self-employed, we would look at your last 3 months income and work out an average, we may require bank statements to support this.