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If you’re wondering: can I get car finance with <a href="https://www.caruno.co.uk/car-finance/bad-credit-car-finance">bad credit</a>? Then you’ve come to the right place.&nbsp;

The better your <a href="https://www.hippomotorfinance.co.uk/car-finance/how-does-car-finance-affect-your-credit-score/">credit score</a>, the easier it is to get car finance on more favourable terms. However, this doesn’t mean that having not-so-perfect credit leaves you with no options. It’s still possible for you to own or lease a quality car.&nbsp;

Caruno can help customers with a less-than-ideal credit rating. By understanding what having ‘bad credit’ really means, and the finance types available to you, we can find you the right deal to suit your financial circumstances.&nbsp;&nbsp;

Here, we look at the role your credit score plays in a car finance application and why having bad credit shouldn’t stop you from finding your next car with caruno.

In short, your credit score is a numerical representation of your credit history. It’s worked out by credit reference agencies, based on how reliable you’ve been at borrowing and repaying money. It’s used to predict your future financial behaviour and is an appraisal of how risky it is for companies to offer you credit. Your score may differ at each agency.&nbsp;

There are three credit reference agencies in the UK: <a href="https://www.equifax.co.uk/">Equifax</a>, <a href="https://www.experian.co.uk/">Experian</a>, and <a href="https://www.transunion.co.uk/">TransUnion</a>.

When applying for any kind of finance here, you will go through a credit check. As part of this process, your credit score is supplied by a credit reference agency, and carefully looked at by the car finance company.&nbsp;

A high credit score shows companies that you’ve been able to make payments on time in the past and that you’ve fulfilled your credit responsibilities. This makes you a safer bet in the eyes of financiers. However, having a good credit score doesn’t guarantee that you’ll get approved for finance. Every application depends on the individual.

If your credit score falls on the other end of the scale, you may still be able to get finance, however, your terms can be unfavourable. In some cases, applicants may be rejected.

&nbsp;What factors lead to bad credit?&nbsp;

Late payments are the most common cause of bad credit, as 35 per cent of your credit score is based on your payment history.

This happens when someone misses repayments on credit card bills, outstanding accounts, or loans, for an extended period.

If you don’t pay your debts for a long time (usually around 180 days), this can lead to creditors ‘charging off’ your loan. At this point, your account could be sold to a debt collection agency.

When your debt is sold to a third-party collection agency, your account will be relabelled as a collection account, further affecting your credit score.&nbsp;

5. Outstanding County Court Judgements&nbsp;

If you fail to make your repayments on time, a financier or creditor may go through the County Court to get their money back. This will result in a county court judgement (CCJ) on your credit report. An unpaid judgement will affect your credit score far more than a paid judgement.&nbsp;

Foreclosure takes place when a homeowner is unable to pay their mortgage. This can result in the owner losing all rights to the property, along with a heavy impact on your credit score.

Bankruptcy is a legal process taken by people desperately looking for relief from their debts. Filing for bankruptcy is one of the most damaging actions for your credit score.&nbsp;

Applying for credit too often will hurt your credit score as each application involves a <a href="https://www.comparethemarket.com/credit-cards/content/hard-credit-searches/">hard search</a>. These inquiries account for about 10 per cent of your credit score and can stay on your credit report for up to two years.

9. Continuously changing your home address

If you move around a lot, credit reference agencies may look at you as less stable than someone who keeps the same address for a long time.

Your credit utilisation ratio is the amount of available credit you are busy using. For example, if you have one credit card with a limit of £1,000 and you use £100, your credit utilisation is at 10 per cent. You should try to keep the percentage between 20 and 30 per cent to keep your credit score at a good level.&nbsp;

11. Not being registered on the electoral roll

Registering for the electoral roll helps companies confirm who you are and where you live. Not registering will mean missing out on these extra points.

If you have a joint mortgage with a partner, for example, their financial history becomes a part of yours. If your partner has a bad credit score, it could have a negative effect on yours.

13. Having little or no credit history&nbsp;

Having no history of borrowing or repaying money can lower your credit score. It can also prevent a credit reference agency from calculating a credit score for you at all. This is because they have no way of knowing how well or how badly you manage debt repayment.

How does bad credit affect your chances of getting car finance?&nbsp;

Buying or leasing a car is an exciting and rewarding experience with caruno. However, if you have bad credit, it could affect your <a href="https://www.caruno.co.uk/car-finance">car finance</a> application in the following ways:

It’s possible to get car finance with bad credit, but, as mentioned above, bad credit can affect the terms under which you receive finance. At caruno, we work with a broad panel of lenders that offer finance to customers from diverse credit backgrounds. This allows our team to find you the best possible terms for your individual financial circumstances.&nbsp;

But there are several things you can do to better your likelihood of being approved for car finance. Here are six to start with:&nbsp;

1. Be realistic about what you can afford&nbsp;

You will stand a much better chance of getting car finance if you choose an option in line with your finances. At caruno, we offer different types of car finance. Our experts&nbsp;

A good option is to choose an approved used car instead of a brand-new one.

A larger down payment will show the finance company that you have good intentions. This could also lead to lower monthly payments.&nbsp;

3. A joint application or guarantor&nbsp;

If bad credit is a real problem for you, a joint application with someone who has a better credit score may be the answer.&nbsp;

A guarantor is another option. If you have a family member or close friend who says they will make payments if you can’t, you are more likely to be approved.

Borrowing money from your bank or credit union, where you hold accounts, is an option. As you have a financial history with them, they may be more likely to approve a loan.

Borrowing money from family or friends is another idea. If someone is willing to lend you the money, it could make your car search much easier.&nbsp;

Leasing, also known as <a href="https://www.caruno.co.uk/car-finance/personal-contract-hire/">personal contract hire</a> (PCH), is a well-known finance option used by many people looking to get their hands on a car. But it is not the only option for finance out there. Both <a href="https://www.caruno.co.uk/car-finance/personal-contract-purchase/">personal contract purchase</a> (PCP) and <a href="https://www.caruno.co.uk/car-finance/hire-purchase/">hire purchase</a> (HP) are other options. Caruno offers all three, meaning we have more flexibility on the types of finance and vehicles that may be available to you.

If you have a very low credit score, buying a car outright may be your best option. Even though you may have to choose an approved used car, at least you will have a car that’s all yours.

Caruno can help customers with bad credit who may have struggled to get approved for car finance elsewhere.&nbsp;

By working with a diverse panel of funders, we can consider and match people from all credit backgrounds with the right car finance lender. Caruno will conduct an initial soft search to give you an instant decision – and this won’t impact your credit score.&nbsp;

Use our fast and easy <a href="https://www.caruno.co.uk/car-finance/eligibility-checker/">eligibility checker</a> to find out your likelihood of approval for car finance.&nbsp;

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Can you get car finance with bad credit?