When you apply for car finance, lenders use your credit information to help understand how you have managed money in the past.
This may include your current credit accounts, missed payments, defaults, CCJs, IVAs, bankruptcy orders, and debt relief orders.
Your credit file is important, but it is not the only thing a lender may look at. A lender should also check whether the monthly payments look affordable for you.
At Go Car Credit, we specialise in bad credit car finance. We are a direct lender, not a broker. Our first check is a soft search. This means you could check your eligibility without leaving a visible mark on your credit file for other lenders to see.
What Is Credit Information?
Your credit information is a record of how you have used credit before. It is held by credit reference agencies.
Your credit file may include credit cards, loans, finance agreements, overdrafts, mortgages, mobile phone contracts, and some household bills.
It may also show public records. These can include County Court Judgments, often called CCJs.
This information helps lenders understand your past borrowing. It does not always explain why something happened.
For example, a missed payment may show on your file. It may not show whether you had a short-term money problem, a change in income, or a difficult life event.
This is why some lenders, including Go Car Credit, look at more than your credit score alone.
Who Can Access My Credit Report?
Only organisations with a valid reason should access your credit report.
If you apply for car finance, the lender should tell you that a credit check may be carried out as part of the application.
You also have the right to check your own credit report. This may help you spot mistakes before you apply.
It may also help you check old accounts, old addresses, and any credit searches you do not recognise.
MoneyHelper’s advice on checking your credit report for free explains how to view the information held by the main credit reference agencies.
What Can a Car Finance Lender See on My Credit Report?
A car finance lender may see several details on your credit file.
These may include:
- Your name
- Your address history
- Whether you are on the electoral register
- Credit accounts that are still open
- Credit accounts that are now closed
- How much you owe
- Your past payments
- Missed or late payments
- Defaults
- CCJs
- IVAs
- Bankruptcy orders
- Debt relief orders
- Past credit searches
- People you have had joint credit with
A lender may use this to see how you have used credit before.
They may also check how much credit you already have.
This helps them decide if a new car finance agreement looks affordable.
Do Lenders Only Look at My Credit Score?
No. Your credit score is not the whole decision.
A credit score may give a lender a quick view of your credit profile. But lenders may also use their own checks.
Different credit reference agencies use different scoring systems. This means your score may not be the same with each agency.
A lender may look at your credit history, income, regular bills, current credit commitments, job situation, address history, and monthly budget.
There is no single score that guarantees approval. The score needed for car finance can vary because each lender may review applications in a different way.
What Is the Difference Between a Hard and Soft Credit Search?
A credit search is a record that shows someone has checked your credit file. This is sometimes called a credit footprint.
There are two main types of credit search. These are soft searches and hard searches.
A soft search does not affect your credit score. It is also not visible to other lenders when they review your file.
Soft searches are often used for eligibility checks, quote checks, and some identity checks.
A hard search may be visible to other lenders. It may happen when you make a full application for credit, or when you decide to go ahead with a finance agreement.
Too many hard searches in a short time may concern some lenders. It may make it look like you are applying for a lot of credit at once.
Go Car Credit uses a soft credit check for car finance at the first stage. This means your first eligibility check does not leave a visible mark for other lenders to see.
When Might a Hard Search Happen?
A hard search may happen later if you choose to continue with a finance application.
This should not usually happen at the first eligibility stage if the lender uses a soft search first.
Before a hard search is carried out, the lender should explain what is happening. This matters because a hard search leaves a visible footprint on your credit file.
With Go Car Credit, the first eligibility check is a soft search. If your application moves forward and you choose to continue, a hard search may be completed before the finance is finalised.
What Is Creditworthiness?
Creditworthiness is part of responsible lending.
It helps a lender decide two things.
First, are you likely to keep up with the payments?
Second, do the payments look affordable for you?
The FCA’s rules on creditworthiness say lenders should think about both credit risk and affordability risk.
Credit risk means the chance that payments may be missed.
Affordability risk means the chance that the payments may be too hard to manage.
For car finance, a lender may look at your credit file, income, bills, and other credit agreements.
The aim is to decide if the finance looks suitable and affordable.
Your monthly budget can also be important. Car finance affordability is about whether the payments fit with your normal household costs.
How Do Lenders Use Credit Information to Assess Risk?
Lenders use credit information to look for patterns.
They may want to know whether you have made payments on time. They may also check whether you have missed payments or had accounts defaulted.
They may look at how recent any problems are. A missed payment from several years ago may be viewed differently from a recent missed payment.
The type of credit may also matter. For example, a lender may look at how you have managed loans, credit cards, overdrafts, or past finance agreements.
Credit information helps a lender assess risk. But it does not always tell the full story.
A person may have had credit problems because of redundancy, illness, relationship breakdown, or another change in life.
This is one reason why specialist lenders may take a broader view than some high street lenders.
Finance must still be suitable and affordable. Approval is never guaranteed.
What Credit Problems May a Lender Notice?
A lender may look closely at credit problems that show you have struggled with repayments before.
This may include:
- Missed payments
- Late payments
- Defaults
- Accounts in arrears
- Arrangements to pay
- CCJs
- IVAs
- Bankruptcy
- Debt relief orders
- Several recent hard searches
Having one or more of these on your credit file does not always mean car finance is impossible.
It may mean the lender needs to look more carefully at your application.
Defaults can affect how a lender reviews your application. But car finance with defaults may still be considered, depending on your current situation.
A CCJ may also affect a lender’s decision. In some cases, car finance with a CCJ may still be possible. This will depend on the lender’s checks, your credit history, and whether the finance looks affordable.
What Is an Arrangement to Pay?
An arrangement to pay may appear on your credit file if you agree to make reduced repayments.
This may happen if you are struggling to keep up with your normal payments.
An arrangement to pay may help you manage the account. But it may also show future lenders that the original agreement was not paid as first agreed.
If an arrangement to pay appears on your credit file, a lender may look at how recent it is.
They may also check whether the account is now up to date and whether your current situation looks stable.
Can I Get Car Finance with Bad Credit?
You may still be able to apply for car finance with bad credit.
This will depend on your credit history, income, monthly budget, and the lender’s checks.
Go Car Credit specialises in car finance for people with poor, bad, or limited credit histories.
As a bad credit car finance direct lender, we review applications ourselves and deal with customers directly.
Bad credit car finance may be considered if you have had missed payments, defaults, CCJs, or other credit problems.
It may also be considered if you have been refused elsewhere.
Being declined by one lender does not always mean every lender will make the same decision. If you have had a refused car finance application, it may help to understand why this happened before applying again.
Finance is subject to status and affordability. This means we still need to check whether the finance looks suitable for your situation.
How Does Affordability Fit Into the Decision?
Affordability is a major part of a car finance decision.
A lender may look at your income, regular bills, rent or mortgage costs, current credit agreements, and essential spending.
The question is not only whether you have had credit problems before.
The lender also needs to consider whether the new monthly payment looks manageable alongside your normal costs.
If a car finance agreement would put too much pressure on your budget, it may not be suitable.
This could be the case even if your credit score is not poor.
Go Car Credit offers hire purchase car finance, where the repayments are fixed for the agreed term.
This can make it easier to understand the monthly cost before deciding whether the agreement is right for you.
Can Financial Associates Affect My Application?
A financial associate is someone you have shared credit with.
This can happen if you have had a joint bank account, joint loan, mortgage, or another joint credit account.
This person may show on your credit file.
In some cases, a lender may look at this link when they review your application.
If you are no longer linked to someone, you may be able to ask for the link to be removed.
This is called a notice of disassociation.
It could help stop old credit links from affecting future applications.
If you apply with another person, joint car finance may link both people to the agreement.
Can Checking My Own Credit Report Hurt My Score?
No. Checking your own credit report should not harm your credit score.
It is sensible to review your credit report before applying for finance.
This may help you find mistakes, old addresses, accounts you do not recognise, or financial links that are no longer relevant.
You may want to check more than one credit reference agency. This is because the information held by each agency may not be exactly the same.
A clear review of your credit profile could help you understand what a lender may see before you apply.
What Should I Check Before Applying for Car Finance?
Before applying for car finance, it may help to check:
- Your name is shown correctly
- Your address history is accurate
- You are registered on the electoral roll, if possible
- Your open accounts are correct
- Closed accounts are marked correctly
- Any defaults or CCJs are accurate
- Old financial links are still relevant
- You recognise all recent hard searches
- Your current income and outgoings are clear
This does not guarantee approval. But it could help you understand what a lender may see.
If you are worried about old credit problems, it may help to understand how long bad credit stays on your file and what information may still be visible to lenders.
Frequently Asked Questions About Credit Information and Car Finance
How do car finance lenders use my credit information?
Car finance lenders use your credit information to understand how you have managed credit before. They may look at payment history, balances, defaults, CCJs, past searches, and other credit commitments. They may also check your income and outgoings to see whether the finance looks affordable.
Can lenders see soft searches?
Soft searches may appear on your own credit report. They are not visible to other lenders when they make a lending decision. A soft search should not affect your credit score.
Will a car finance application leave a mark on my credit file?
It depends on the type of search. A soft search should not leave a visible mark for other lenders. A hard search may be visible to other lenders and may happen later if you choose to continue with a full application.
Does bad credit mean I will be refused car finance?
Not always. Some lenders specialise in helping people with poor or limited credit histories. Approval is not guaranteed. The lender still needs to check your status, credit history, and affordability.
Can lenders see missed payments?
Yes. Missed or late payments may appear on your credit file. A lender may look at how recent they are, how often they happened, and whether your accounts are now being managed well.
Can lenders see CCJs and defaults?
Yes. Defaults and CCJs may appear on your credit file. These may affect how a lender reviews your application. Go Car Credit may still consider applications from people with poor credit, but finance is always subject to status and affordability.
Should I check my credit report before applying?
Yes. Checking your credit report before applying may help you understand what a lender could see. It may also help you find mistakes or old information that needs updating.
Is Go Car Credit a broker?
No. Go Car Credit is a direct lender. This means we review your application ourselves and deal with you directly throughout the process.
