Not all of us have the luxury of a good credit score, and most of the time there are extraneous circumstances that are responsible for it. Whether it’s being made redundant, or even just missing a few payment deadlines because your wages didn’t come through properly. These things are often completely out of our control but can still completely change our lives.
People with a poor credit rating face a higher repayment percentage than those with good ratings. This not only makes it harder to pay back, but costs more in the long run. It’s also harder to receive a loan in the first place.
Don’t despair though. If you need a car, but you know that your credit history isn’t very good then these tips could help you to get back on your feet – and boost your credit score while you’re at it.
Find out your credit score
You can use services like Experian or Equifax, to figure out exactly what your credit score is. These services offer a free trial before moving to subscription, but they give you accurate information. Just remember to cancel the subscription before any money gets taken.
Of course, you can also apply for a statutory report. These cost £2 and collect both private and public information, which lenders use to determine whether to approve your loan or not. If your credit score is good or excellent, then you’re in the clear.
If you’ve been marked as bad or low credit score, however, this means that you either have a history of missing payments (just a couple can be enough to damage your score), or there simply isn’t enough data on you yet. The latter is prevalent among younger people, because they haven’t yet had a chance to earn or build credit yet.
There are still ways to combat this, and car finance sites such as Carvine are exceptionally useful at finding finance for bad credit scores. This isn’t a guarantee, but they do try to help in any way they can.
Apply to a bad credit car finance company
Your second step is to apply to one of these websites. If you apply to multiple at once, you may affect your credit score, or at the very least make the finance process far more difficult for yourself.
When you do apply, you’ll be asked for your personal information. This is so that the company can gather all the information about you, and build the most accurate picture possible. It is imperative that you fill out each section to the best of your ability, otherwise, you may end up being denied offers, or even worse, getting offers you can’t afford to repay.
Typically, they’ll start by doing a ‘soft search’. This allows them to gather data and find the right loan for you without impacting your credit score. Being denied loans reduces your score further, and can make it nearly impossible to dig yourself out of a hole. By doing a soft search, this isn’t recorded on your credit file. The finance company are then able to give you a rough idea of what you can get, without causing any changes to your credit file.
Pay the money back on time
If you want to improve your credit score, then this is the most important step. By meeting your payment deadlines, you’ll start steadily building up your credit score. As you prove yourself to be more reliable and able to pay back what you owe, your credit score should rise accordingly.
Beware though, you must meet your repayments to avoid damaging your credit score further. It’s best to set up a direct debit to make sure you never miss a repayment. If you miss too many repayments, your car may get repossessed by the lender. This is usually the last resort, but the entire reason why you should be certain you can afford to meet repayments before you accept.
When you’ve finished with your repayments, you might find that you’re able to borrow more. You might be eligible for higher value credit cards, or other perks of a better credit score. It’s important that you don’t abuse this, or you may find yourself in the same situation as before.
Instead, try spending 10-15% on your credit card each month, and pay that back. This will continue to prove that you can manage finances well, and continue to boost your credit score. Before you know it, you’ll be looking at an Excellent on your report.
Hopefully, you should now be able to get yourself behind the wheel and back towards a good credit score.