November 13, 2024
What credit score is needed to buy a car?
When you're considering to buy a car on finance, your credit score is important. Discover how a credit score impacts your car buying process and the Boshhh Mobile solution.
The importance of having a good credit score is a common theme at boshhh.com - it's particularly important when applying for credit.
But when it comes to buying or financing a car, your credit score is even more important than you think.
Read on to learn more about the relationship between your credit score and car purchases, as well as how a credit-boosting SIM plan can help you.
How a credit score impacts car buying
Credit scores represent your responsibility to manage money and your experience with credit repayments.
If you choose to finance a car, this is where you’ll see the most impact from your credit score - it affects interest rates and the cost of your monthly payments.
Your credit score will also impact:
Loan approval
Financing a car is a form of lending. Lenders will look at your score to assess the risk of lending money to you. If you have a higher score, this indicates responsible credit use, making approval more likely. Whereas lower scores generally lack this experience, so you may find it harder to get approved for a car finance deal or face stricter lending criteria.
Interest rates
Those with lower credit scores are likely to be greeted with higher interest rates, meaning you’ll pay more in the long run than someone with a good score.
Loan terms
Lenders may offer more favourable terms (like lower down payment requirements) for customers with higher credit scores. Customers with poor credit scores often need to make a larger down payment to reduce the lender’s risk.
Monthly payments
Higher interest rates and more expensive down payments will make the car pricier overall.
In contrast, lower rates and more favourable terms for customers with higher credit scores will result in more affordable payments.
Choice of car
Some companies restrict those with low credit scores to certain types of cars under a specific price. The higher the score, the more flexibility to choose higher-priced vehicles.
Credit score needed to buy a car
In the UK, there isn’t a specific credit score required to buy or finance a car. However, different lenders use different criteria.
As an example, here’s what you could expect when purchasing a car based on your credit score (using the Equifax score range):
Excellent (800+)
Low risk
The best interest rates
Favourable terms
Flexible down payment options
Good (670-739) & Very Good (740-799)
Good chance of approval
Competitive rates and terms
A range of financing options available
Access to higher-priced vehicles
Fair (580-699)
Less competitive interest rates
Larger down payment required
Less flexible terms
Shorter loan durations
Higher monthly payments
Poor (300-579)
Challenging approval process
Higher interest rates
Stricter requirements
Very large down payment required
How to check your credit score before buying a car
Checking your credit score before buying a car is highly recommended. This gives you an understanding of what lenders will see when they take a look and a better idea of which terms and cars you’ll be deemed eligible for.
You can use free Credit Reference Agencies (CRAs) to provide your report - we recommend Equifax, the credit partner of Boshhh.
You can also sign up for credit monitoring apps, which will give you access to your report, helping you monitor your credit score and dispute any changes.
Make sure to check over your account often to ensure everything is correct - from outdated information to incorrect payment records, errors could negatively impact your credit score.
How to boost your credit score for a better chance of approval
If you’re concerned about your credit score affecting your ability to buy or finance a car, there are a few things you can do to give it a boost:
Avoid new credit applications
Credit applications - including loans, mortgages, and car finance - require a hard credit search. These are flagged on your credit report and stay on there for at least six months.
Too many of these suggest you’re too reliant on credit and struggle to manage your money responsibly.
Get organised
If you have any outstanding debt, it’s time to organise your finances and plan when and how you’re going to pay it off.
By having a payment schedule to stick to and prioritising outstanding debt, you can gradually reduce your balances, improve your credit utilisation ratio, and demonstrate financial responsibility.
This not only boosts your credit score but also shows potential lenders that you’re committed to managing debt responsibly, increasing your chances of loan approval with favourable terms.
Join Boshhh
Our credit building SIM plans are designed specifically to boost your credit score with each monthly payment you make.
With guaranteed acceptance and your first two months totally free - a better financial future and credit score starts with Boshhh Mobile.
Get started today.
