Buying your dream car is a big aspiration for many people. It can be an uphill battle if you are struggling to get approved for bad credit car finance or are struggling to save up what you need. Your dream car could be anything, from a high-end luxury vehicle or a car that you can simply call your own and bought with your own money. Whatever you set your sights on, you shouldn’t let a low credit score hold you back! There are many ways in which you can easily increase your credit score but how can you rebuild your credit score for your dream car?
Meet your repayments on time
One of the biggest factors which affect your credit score is your ability to make payments on time and in full. If you have a credit card, car loan, mobile phone contract, utility bill, direct debit, TV subscription service or anything other form of credit, you need to make your repayments on time. This shows potential lenders that you can be trusted to pay back any, money you owe and can also increase your credit score at the same. If you’ve set your sights on your dream car and would like to spread the cost with car finance or leasing, you should work on improving your credit score before you start applying.
Register on the UK electoral roll
Whilst being on the electoral roll does not specifically increase your credit score. It can make your application more favourable to potential lenders. This is because the electoral roll can be checked to verify your identity and your living address.
Don’t make multiple credit applications
Your dream car may be a specific make and model and you should shop around for the best deal you can get. However, making multiple applications for a loan or finance in a short space of time can negatively impact your credit score. It can indicate to lenders that you have already been refused for finance or that you are desperate for credit. A good option is to use a car finance broker, who can compare a range of lenders for you and get you the best deal for your situation. Also make sure you opt for a ‘soft search’ credit check which doesn’t impact your credit score.
Fix any mistakes on your credit file
Many people regularly check their credit score, but you can also check your credit file to see what is listed on there. You should make sure all your information is accurate and up to date. If there are any mistakes on your credit file that you do not think should be there, you can take this up with your credit referencing agency who provided your credit report.
Build credit when you have no credit
You may have been wanting your dream car for a long time but have not had the opportunity to build up any credit. There is a massive misconception that having no credit means that you can easily get accepted for credit. However, if you haven’t taken out credit in the past then it can be hard for lenders to know what sort of borrower you will be and if you can be trusted to pay back your loan. You could consider a credit building card to make a few payments a month and then pay them back on time and in full to increase your credit score. You could also consider a mobile phone contract or any other sort of lower monthly repayments.
Check your financial links
When you check your credit file; you should also check if there are any other names listed on your file. Another person such as a partner, family member or friend could be listed on your account if you have taken out a joint application or have used a guarantor in the past. If you no longer have any active credit with your financial link and they have bad credit, you should contact your credit referencing agency and dissociated yourself. This is because their negative credit score can also negatively impact yours too.
Make sure you budget correctly
If your dream car comes with pricey monthly payments, then you should be confident that you can meet the repayment schedule each month and you should never apply for more credit than you can handle. As mentioned, missed payments is one of the biggest reasons why your credit score can decline so it’s important that you budget your finance so you can meet your repayments each month, on time and in full.
