FREQUENTLY ASKED QUESTIONS SURROUNDING POOR CREDIT

Can I get car finance if I have a POOR credit history?

Poor credit is an area that the 360Funding team understands well.

We’ve helped thousands of customers, all with differing credit histories to find the right finance deal for them. 

By getting to know you and your own individual circumstances, we will tailor a search through our carefully selected panel of lenders, focusing on those we know have a history of providing car finance to customers with your circumstances.

How does bad credit affect me when I need to borrow money?

Whenever you want to borrow money from a lender, they will run checks on your credit score to see if they will lend to you. They’ll base their decision on your credit score and their own lending rules on who they can lend to.

A ‘standard’ lender, such as a high-street bank, will often not lend to customers who they view as having bad credit.

We recognise that even if you have bad credit, you may still need to borrow money to afford a car, van or motorbike for your everyday needs, and particularly if you’re self-employed or you commute to work.

Why do I have bad credit?

Your credit score is influenced by a variety of factors. You can improve it by sticking to the terms of a credit agreement, but it can be negatively impacted if you don’t stick to the agreement. This can be due to:

  • Missing a payment or payments to your lender

  • Late payment on bills

  • Being declared bankrupt

  • IVAs

  • CCJs

What else affects my credit score?

Lenders may look at additional factors to help them decide whether to lend or not. These include:

  • Multiple instances of full credit checks in a short time period

  • Moving home a lot over a short period of time

  • Not being registered on the electoral role

What doesn’t impact my credit score?

There is a lot of misinformation and myths surrounding what affects your credit score. The following factors won’t impact your credit score:

  • Previous occupants of your home address

  • Friends and family you live with (as long as you are not financially linked e.g. sharing a mortgage)

  • Soft search credit checks

  • Checking your own credit score

How do I check my credit score?

You can check your credit score with the main credit referencing agencies, Experian, Equifax, or TransUnion.

You can check a basic version of your credit report once a month using free services provided by these agencies, or you can sign up for a more in-depth monitoring service for a monthly subscription.

How can I improve my credit score?

You can improve your credit score by paying off your outstanding finance and/or by continuing to borrow money and making repayments on time, but this can take a while.

There are also other ways you can improve your credit score, for example by making sure you are registered on the electoral roll or by living at the same address for a long time.

What is a good credit score?

Exactly what constitutes a “good” credit score depends on which agency you use to look up your score, as each one has its own criteria.

Having a good credit score won’t guarantee you finance, because lenders look at different factors. However, as a general guide the main credit referencing agencies class the following scores as “good”.

  • Experian – 881+

  • Equifax – 420+

  • TransUnion (Callcredit) – 4/5

Can I get a loan with bad credit?

Having a poor credit record doesn’t mean you can’t get car finance (or a loan for a vehicle such as a van or motorcycle). But it may make it harder to find a lender that will accept your application.

As a specialist broker for people with bad credit, we’ve provided car loans and finance for thousands of people across the country to help them get the vehicles they need.

We may even be able to lend to you if you have an Individual Voluntary Agreement (IVA) or a County Court Judgement (CCJ) in place. Apply today to see if we can help you.

IVA’s and Car Finance

Being in an IVA doesn’t mean that you cannot get approved for car or van finance. Moneybarn is a car finance specialist lender who considers applicants who are in an IVA. Understanding what an IVA is and how one can affect your ability to be approved for finance, are the first steps to consider. Moneybarn’s IVA guide is here to help.

What is an IVA?

An individual voluntary agreement (IVA) is a formal agreement to repay your creditors at an amount you can afford. This can be a one-off payment known as a lump sum IVA or over a longer period to spread payments which usually lasts five or six years.

An IVA could be a good solution if you’re in debt as you’ll be able to write off any unaffordable debt and start to rebuild your credit score.

Can I get car finance when in an IVA?

If you are currently in an IVA it can make it difficult to take out a new credit agreement, such as car finance. However, it’s not impossible.

Being in an IVA shows that you are committed to resolving historical credit issues, but you may still find it hard to get finance. You may need to use a specialist lender such as Moneybarn, who understands how being in an IVA can impact your credit profile.

360Funding has expert knowledge in providing finance to customers who have bad credit or a poor credit score. Our team will ensure that the new finance agreement is completely affordable for you by matching the repayment amount and term to suit you. The APR will also be calculated to reflect your credit profile.

Can I keep my car on finance on an IVA?

If you are in an IVA you will usually be able to keep your car on finance but it can depend on the circumstances and permission of your Insolvency Practitioner will need to be obtained. If your vehicle is essential for you to be able to commute to work then it’s extremely likely you’ll be able to keep your vehicle and car finance agreement.

How will an IVA affect my credit rating?

An IVA will be recorded on your credit report which will result in a decreased credit score. This may mean it’s difficult to get credit such as loans, a mortgage or finance, as this information will help them decide how likely you are to pay them. An IVA shows you’ve had difficulty repaying debts in the past.

What does A LENDER need if you’re in an IVA?

They will need to see a letter from your IVA supervisor, to say that entering into a new finance agreement will not put you at further risk.

What is a CCJ?

A CCJ stands for County Court Judgment, which is a type of Judgment in England, Wales, and Northern Ireland that can be granted against you if you fail to repay any debts that you owe.

Before you have a CCJ applied against your name, your debtors must issue you with a warning letter, to let you know that you need to repay what you owe, before they pursue legal action.

The Judgment will issue a deadline for repayment and outline how much you owe and how you will need to pay. CCJs are kept on record for six years, even after you have paid off the amount, and having one on your record can make it difficult to obtain car finance.

Can I get car finance with a CCJ?

Some specialist lenders can approve car finance for an individual who has a CCJ against them, or is:

  • Self-employed;

  • In part-time work; and/or

  • Has a poor credit rating due to having missed a credit card payment in the past

Securing car finance with a CCJ is certainly possible, and we could help you.

Can I get car finance with a loan default?

A loan default can occur if you’ve missed payments to a lender or missed payments on household bills. A default can stay on your credit file for up to six years, even if you pay the debt off. At 360Funding we consider each application and we may be able to offer you car finance, even if you’ve been turned down by other lenders because of a loan default.

How to avoid receiving a CCJ

If you find you’re struggling to make your repayments, speak to a free debt adviser. They can help you make an offer to your creditors and explain the options available to you.

Usually, you should be able to come to an arrangement that allows you to continue making payments you can afford and avoid court action.

Make your loan repayments on time and pay off your debts early if you can. This shows lenders that you’re a sensible borrower. If you’re using savings to pay off debts, make sure you keep enough cash in an easy access savings account for emergencies.

Managing your budget with a CCJ

When you have had credit issues it is more important than ever to ensure that you have a regular income. This may mean that you need reliable transportation to get you to work, or even to allow you to earn money. Unfortunately, your CCJ may affect your ability to easily access finance.

We understand that keeping to your monthly budget is essential. Not only can we help you access car, van or motorbike loan if you have a CCJ, but we will also work with you to find a monthly repayment that is affordable for you.

You may find yourself in unexpected circumstances where you need a car or van to continue to earn money, perhaps for work. In this case, your CCJ may prevent you from getting the finance that you need to get on with your everyday lifestyle.

At 360Funding, we understand that living affordably is key, especially if you have a CCJ. To that end, we ensure that all car finance agreements are suitable for you, and that the length of your repayments make sense for you and your life.