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How to check your credit score – and get the car you want

How to check your credit score – and get the car you want

2 October 2022 Concept Car

Do you know how to check your credit score? We’re here to help. After all, credit scores are an important piece of the puzzle when applying for car finance.

In this article, we’ll show you how to get the information you need without having to pay for it. We’ll explain why it can be helpful to perform this check regularly and how you can use that information to your advantage.

But we’ll also explain why credit scores are usually pretty over rated when it comes to car finance. At Concept Car Credit, for example, we will never reject your application solely based on your rating.

Ready to find out all you need on your credit score? Then read on …

What is a credit score?

A credit score is a number expressing your creditworthiness. The higher that number, the better.

Creditworthiness is based on many different factors. We’ll go into those in a second. To put it simply, it depends on how much risk a lender takes when extending credit to you. Credit institutions want to make money by giving you a loan but they don’t want to lose that money in case you end up defaulting on it.

Generally speaking, the higher a credit score, the smaller that risk and the higher the chances of getting a nice return on their investment.

Are there different kinds of credit scores?

In fact, there are as many credit scores as there are lenders – and then some. This makes it very hard to speak about the topic in general terms.

When people talk about “their” credit score, what they usually mean is their “guide credit score”. Curiously, although practically ever lender uses these guide scores, they are not actually the basis for deciding on your car finance application.

Confused? Then let’s first look at guide scores and then at the lender scores used by dealers, banks and other car finance providers.

What is a guide credit score?

A guide credit score is calculated by a rating agency and based on your credit report. It includes information about your past financial behaviour and a few more pieces of information.

The following questions are most important in deciding on your guide credit score:

  • Have you ever defaulted on a loan in the past?
  • Have you missed payments in the past?
  • Are you currently in the red on any of your accounts?
  • How much of your credit card limit are you using up?

The thing is that each credit rating agency weighs these factors slightly differently. No two guide credit scores are ever exactly the same.

That said, in the UK, the guide credit scores provided by Experian, Equifax and TransUnion are by far the most commonly used. Any of these three should give you a fairly good idea of your creditworthiness.

What is a lender credit score?

Lenders will take guide scores into consideration when deciding on a loan application. Rarely however are they the be and end all of the process.

This is because lenders may want to base their decision on a wider set of data. Depending on their preferences, they may be willing to take on more or less risk. And since they can ask you for more information, the negative impression created by a low guide score can be offset by other, positive aspects.

Negative information from your distant past is already less relevant than more recent one in the guide score. But lenders can go even further and decide to ignore very old entries entirely if your current situation has clearly improved and solidified.

Which credit score is most important / relevant?

Hardly anone ever speaks about the lender credit score. Here’s why: There is no way of checking these credit scores. They are purely for internal use at a credit provider / dealership and these companies will never give them out to anyone else.

In reality, these scores are the only ones that really matter – after all, a dealer may chose to completely ignore the estimate by a rating agency.

This doesn’t mean, however, that you won’t have at least a rough idea of what lenders are interested in. After all, they will ask you for the information they find relevant as part of their application process. You just won’t be able to pin a number to these scores as easily as you can with a guide credit score.

So are the credit scores provided by credit rating agencies useless?

Not at all. We’re living in an age of abundant information and very little time to go through it all. A credit score contains a wealth of data within a single, easy to comprehend number. That alone is extremely useful and a great concept.

It has often been said that a credit score becomes more useful if you combine it with your credit history. That’s probably true. The history contains a closer look at all of the different events that were used to calculate your score. So you can really get a lot more out of a credit score if you also consider the related history.

At the same time, a score can still be very interesting even on its own. From our experience, it is very rarely “off”. You just have to know exactly what it can tell you and what its limits are.

How often should I check my credit score?

Once a month seems like a sensible rhythm to us. Allow us to explain.

For one, your creditworthiness is an important piece of information if you’re serious about improving your financial status. Staying up to date on it can come in handy if you suddenly need to get cash for an emergency, too. And it will allow you to make decisions both more spontaneously and profound.

Credit scores are regularly updated, but there’s no point in checking on them daily. Fluctuations will usually be minor and as long as you’re not actively looking for a loan, there is very little point in wasting time looking at the numbers too often.

However, a regular monthly check-up will give you a good idea whether things are looking up or going down. Also, you can respond to any sudden changes – for example, by checking whether there might have been a mistake.

Which credit rating agencies should I check?

The more lenders are working with a particular rating agency’s score, the more relevant it will naturally be.

In a fascinating overview, consumer rights agency Which asked a few of the UK’s biggest banks and credit providers which score they were using. The result was eye-opening:

  • Experian’s is the most widely used score and a small number of institutions are even working exclusively with them.
  • The Bank of Ireland is only using Equifax.
  • Most institutions are using two different scores at least.

What this means is that, clearly, very few lenders consider one of the three major scores to be perfect. Neither should you. Since you can get a free credit report regularly, there really is no reason why you should leave out any of the three big agencies.

This will also give you a far more precise picture of your own finance status.

So how do I actually check my credit score?

Here’s how things work for the three biggest UK credit rating agencies:

  • With Experian, you can sing up to get a look at your credit score for free. The information automatically updates every month, so you can easily verify your current score every 30 days. That said, your credit history is not part of this service anymore.
  • Equifax has its own credit score information brand. It’s called Clearscore and you can sign up for it without having to pay anything. Clearscore offers plenty of useful information and you can always close your account if you no longer wish to make use of it.
  • TransUnion uses a similar service, called Credit Karma. It’s pretty much the same thing and, just like Clearscore, it comes without any additional charges. Simply sign up for the service and then log in to access your TransUnion score.

How does checking my credit score help me get the car I want?

Soft-checking your credit score alone won’t hurt your credit score. Only so-called “hard credit checks” have any impact on your rating. These are performed by lenders at the point when you actually want to go ahead with your loan application.

But can checking your credit score actually help you get the car you want? In itself, the process of obtaining this information won’t make a difference in terms of your chances. However, we still believe it is an important step in the right direction:

  • You can ask for the correction of mistakes in the score as soon as possible.
  • You can use the score as a gauge for improvement. Check your score, then implement changes and watch how they impact your rating.
  • Merely by staying up to date on your financial status will bring the topic to the front of your mind.

Can I still get a car credit if my credit score is low?

First of all, are all of your credit scores low or is just one of them below expectations? It is not uncommon for one of the three major credit ratings to be significantly different from the other two. If so, it may be useful to find out why this is the case.

Secondly, define “low”. Dealerships would soon be out of business if they were to only consider application from drivers with a perfect rating. Your score can usually still be “average” or still slightly “below average” for most lenders or dealerships to at least consider you.

But even with a very low score, a successful application is still possible.

As we mentioned, lenders will look at a variety of factors, not just the guide credit score(s). As such, it is important to know what the dealerships or credit institutions you chose to work with find important.

At Concept Car Credit, we welcome anyone serious about car finance. Let us know what you need and we’ll work with you to make it happen.

Contact us now for more information or a free quote.

Phone: 0800 093 3385

2 October 2022 Concept Car