Car keys with loan paperwork

Myths Around Bad Credit Rating is Holding Brits Back

Over half of us Brits think we can’t get car finance if we have a poor credit score, according to a new survey

The survey from Refused Car Finance showed that many of us have misconceptions when it comes to our credit rating. 

Almost 80 per cent of respondents said that car finance has a negative impact on our credit score. The same amount believed that our credit score is the most important factor in getting approved for finance. And 60 per cent said that having a poor credit rating means we can’t get finance. 

Many of us are also confused about what factors can have a negative effect on our credit rating, such as our monthly income, age and employment status. 

To apply for car finance we need to be at least 18 years old because we are signing a legal document. Lenders will normally ask for our monthly income to make sure we can afford to pay back the agreement and prove our affordability. But how much we earn does not affect our credit score. We can also get accepted for finance if we are self-employed, unemployed or in the armed forces. 

Equally, applying for car finance does not impact our credit rating negatively. It is only if we make multiple applications for finance that problems may arise. 

In reality, despite our credit history, we will usually be matched with the most suitable and affordable lender. If we are on a low income or benefits we can still be approved for car finance but the lender needs to be aware so they can offer us a pay-back rate we can afford.

Over 25 per cent of people surveyed said they didn’t know what their current credit score is. 

We should really check our credit score at least once a month, just to make sure all our information is accurate and up to date. If there are any finance applications we don’t recognise, we could have been victim to identity fraud. In this case we should contact the credit referencing agency who provided the credit report. In the UK the main ones are Equifax, Experian and TransUnion.

For tips on how to improve your credit rating, click here.

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