Tips to get your credit score up for vehicle finance

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Tips to get your credit score up for vehicle finance

Purchasing a new vehicle requires a lot to consider. Firstly, you have to decide whether you’re purchasing a second hand or a brand new car, which dealership you’re purchasing from, and more. 

But that isn’t the most stressful part, the most tedious part is applying for finance. Getting pre-selected for private car finance isn’t impossible, however, if you have a low credit score it can become quite a task to get a lender to trust you.

If you’re looking for helpful ways you can boost your credit score in order to get private vehicle finance then read our top tips below.


Check for any errors

Before you go on a hunt to bring your credit score up again, you should always check your credit score record and see if there have been any errors. Although it won’t happen all the time, it’s always a wise idea to view your record and search for any errors. There might be a chance that you missed something or something doesn’t sound right.

If you do happen to find any misinformation call the creditor and find out what it means. There could be a good chance that it’s the mistake which lowered your score which led to you being declined by an authorised financial service provider. You should also be checking your score every year, that way it’s easier for you to notice any discrepancies which might occur. It’s no fun only noticing them when you’re trying to get financing.


Think about why your credit is low

Although the answer could simply be that you’re not paying the account, you need to ask yourself why that is and how are you handling your finances. If you’re someone who can’t seem to get out of debt you should ask yourself why that is.

Maybe you’re feeling demotivated because your balance won’t go down. That could simply be because you keep using your credit card or clothing account while you still have a high balance which you need to pay. Your balance won’t go down if you do that so it would be best to stop using it completely until you bring the balance down. That way it is easier for you to see even the smallest improvement which will motivate you again.


Make all your payments on time

The best thing that you can do for your credit is to ensure that you pay all your debts on time. Try and avoid missing payments or paying lower than your instalment amount as that can indeed put a dent in your credit score.

If you want to have the finance options available for your new vehicle, you need to make sure you pay up all your outstanding debt. If you’re able, pay more than the instalment amount, that way you can settle your bills faster. The faster you settle your bills, the more money you’re able to put away for your vehicle. Having too much debt can be stressful so try to eliminate a few of those credit card debts to have more money to spend on things you would want to spend on.


Keep your balances low

You should always try to keep your credit balance low, especially when credit utilisation ratio is being calculated. The utilisation ratio is calculated by adding the balance of your credit card the dividing it by the amount of your total credit.

Ideally, having your score at 30 percent or lower will have a good bearing on your score. Lenders are more inclined to trust a consumer who hasn’t used up all of their credit as it shows how well you manage your credit. If you’re using more than 30 percent currently, you can start by paying off your accounts slowly and make sure you keep them low.


Don’t apply for credit you don’t need

You don’t need a handful of credit under your name. Not only will you get tempted to spend but it could also bring your credit down rather than up. Avoid things which will hurt your credit score or create a hard inquiry on your score.

A hard enquiry is when the lender you were seeking credit from takes a look at your credit report during the decision making the process. Hard enquiries appear on your credit score which can often have an influence on your credit score. Your aim is to ensure you have soft enquires which is when a lender or yourself check your report. This doesn’t affect your report because this is checked when the lender is checking to pre-approve you for financing.


Closing thought

Keeping and maintaining a good credit profile isn’t as difficult as it seems. If you make sure you pay your debt on time and more importantly you need to know your credit score. Keep checking it and finding new ways to improve it will make all the difference in the world allowing you private vehicle financing for your dream car. 

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