If you have a poor credit score you may feel this is reason to avoid car finance, or risk securing a ridiculously expensive deal. This doesn’t always have to be the case, as bad credit car finance is helping thousands of customers in the UK get the car of their dreams – and a deal to suit their financial circumstances. Carry on reading to see if it is something you can take advantage of too.
Common Causes of Poor Credit
Failing to Stick to the Credit Agreement
Late, missed or insufficient payments are all added to and evident on your credit file. Too many of these and your credit score may be classified as poor by credit reference agencies.
This comes as no surprise, but declaring bankruptcy or using an Individual Voluntary Arrangement (IVA) will seriously affect your credit rating.
Being the Subject of a County Court Judgement (CCJ)
County Court Judgements should not be too much of a concern if you repay the money you owe on time. If you are issued a CCJ, you should endeavour to pay the full amount within one month. Also, obtain a certificate of evidence from the court to say you’ve paid it. If you do not do this, a CCJ could affect your credit rating for six years or more.
Paying the Minimum
Paying the minimum amount owed to any of your lenders will keep them happy and will prevent any late or missed payment flags from occurring on your credit report. However, paying more than the minimum each month may mean you pay less interest, which can improve your credit score. It also shows that you are not always constantly living on the wire, or potentially struggling just to make minimum payments.
Maxed Out Finance
If all of your credit cards are maxed out, it shows your credit utilisation is at 100%. This shows you have used every single penny of credit available to you without paying any of your outstanding balance off. This is one of the most damaging things you can do to your credit score, as it shows you have no problem spending money, but may have some issues paying it back.
Having No Previous Finance History
Having no previous finance history can also be a hinderance. If you have never borrowed anything before, how can you be trusted to borrow anything moving forward? This is a bit of a vicious circle as it is fair enough for the customer to reply – how can I show I am a trustworthy borrower until you lend me something?
Get Your Dream Car with Bad Credit Car Finance
If any of the reasons above have affected your credit score, do not fret, there are still options out there for you to obtain car finance for the car of your dreams. Your credit score is not fixed and can be improved over time. A bad credit car finance deal is any car finance deal that is offered to someone with a poor credit history.
This allows customers to spread the total amount of a new car over a fixed term and period of time, with monthly payments that build their credit score at the same time. This option negates the need to make a large upfront payment in the form of a deposit. Nevertheless, you will need to be able to prove that you can afford to keep up with the monthly payments.