Bad credit

Definition

Bad credit or adverse credit, refers to a low Credit Rating. According to the credit reference agency Experian, a bad credit rating is typically less than 580 on a scale of 300 – 850.

If you’re struggling to make debt repayments or have a history of financial problems, it’s likely you have a bad credit score and you may find it difficult to get accepted for car finance.

The good news is there are a wide range of Bad Credit Car Finance options, specifically tailored to individuals with a poor or bad credit score.

Why not Check Your Eligibility today and receive an instant decision, without affecting your credit score?

How it works

Your credit rating is calculated by credit reference agencies using the data on your Credit File. This includes your credit history, hard credit searches, your payment history, address history and employment details.

If you have one or more of the following entries on your credit profile, there’s a chance you may have bad credit:

• Payment arrears
• A history of missed payments
• CCJs (County Court Judgements)
• IVA
• Bankruptcy
  
  

Can I get car finance with bad credit?

Yes. Whilst most brokers are focused on individuals with a strong credit rating, we work with a specialist panel of lenders to provide car finance packages for people with bad credit. Often, we can even help individuals who have been refused car finance elsewhere.

For example, we offer Hire Purchase to a wide range of Credit Profiles, including those with bad credit. But if you’re struggling to get accepted for car finance on your own merit, you may want to consider a Joint Application, or a Guarantor Loan.

Whilst there are plenty of options available for individuals with bad credit, your cost of credit will often be greater compared to someone with a perfect credit score. This is because Interest Rates are higher for people with a low credit score, as lenders assume there is a greater risk lending to someone with previous financial problems.

How to fix your bad credit

Improving your credit score doesn’t happen overnight, but with a little work and some effort, it’s certainly possible.

Here are 5 steps to help you improve your credit score:

1. Sign up to electoral roll
   By registering on the electoral roll you’re more traceable and lenders can easily verify who you are and where you live.
   
   
2. Don’t make multiple credit applications
   If you apply for credit multiple times over a short period, it can make you appear ‘credit hungry’ and can be damaging to your credit score. If you need to apply for credit, look for companies like Creditplus that offer a Soft Search, as this will not leave a trace on your credit report.
   
   
3. Query mistakes on your report
   Your credit profile may contain mistakes that can impact your credit score. If you spot any inaccuracies, query it with the credit reference agency concerned, and if it’s wrong they’ll update your report accordingly.
   
   
4. Pay your bills on time
   By ensuring you make your all payments on time, you’ll soon notice an improvement in your credit score.
   
   
5. Use a credit card for small spending
   If you have a limited credit history, using a credit card for small expenses and paying it off each month is an effective way to build your credit profile and prove your reliability to lenders.