Car credit checks: How to check and improve your credit score

A low credit score could stop you from buying your next car on finance, but all isn't lost. Here's your complete guide to both seeing your credit report and making it better.

  • Where to check your credit score
  • How does credit rating work?
  • How to improve your credit score

You might not even be aware it happened but it's likely your credit score will have been checked several times over the past year. If you've applied for a mortgage, a loan or any other kind of finance, your financial background will have been scrutinised.

Sometimes known as a credit search, this involves the company lending you money viewing your credit report, which is essentially a health check on your financial history. Companies don't need your consent to look at your credit history, but require a genuine reason for doing so, such as you buying insurance.

Lots of companies checking your credit score over a short period of time can negatively affect your rating, even if you have never missed a payment, but looking at your own profile won't impact it at all, meaning you can keep tabs on it as often as you wish.

Under the Data Protection Act 2018 you have a right to request a copy of your credit report, dispute any inaccurate information on your credit file and have errors corrected within 28 days.

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Who can perform a credit check?

When you see your own credit report it may come as a surprise as to how many credit checks have been carred out on your financial history.

Some companies, such as banks, building societies and credit card providers are obvious ones but it's not unusual for utility companies, mobile phone networks and letting agents if you rent your home to also appear.

It's not unusual to see your employer listed, although it won't have access to your full, detailed credit report because it will have no legitimate reason to do so.

There are two levels of search that reveal different levels of financial data about you, known as 'soft' and 'hard' credit checks.

What is a 'soft' credit check?

Essentially a preliminary search, typically for lower value purchases, 'soft' credit checks have no overall impact upon your credit score.

Sometimes 'soft' checks are also used as a method of cross-referencing your identity, a potentially useful anti-fraud measure.

'Soft' credit checks are only visible on the version of the report you can view, remaining invisible to any companies undertaking a 'hard' check.

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What is a 'hard' credit check?

Applying for a mortage, loan, credit card or any other type of finance will result in the lender conditing a 'hard' credit check. Given the inflated prices involved nowadays, it's not unusual for utility companies — your electricity, gas and water providers — and mobile phone networks to opt for this deeper dive.

'Hard' checks are complete searches of your credit report so that companies can make a more informed decision about whether or not to accept your application, based on your overall credit score.

It's vital to remember that these more detailed searches are recorded on your credit report — lots of 'hard' checks will adversely affect your score, potentially for up to six months, which may prevent you from successfully applying for finance.

Each 'hard' check is a log of how many credit applications you've made. Even if you haven't defaulted on a payment, future loan and credit providers might interpret the data as a negative indicator of heavy borrowing or financial struggles — that red flag could result in your credit application being declined.

What is shown on a credit report?

Rather a lot! Your financial history over the previous six years will appear on a 'hard' credit check. That timescale being mutually agreed by financial lenders and regulators.

Your report is a snapshot of all of your key financial comittments, giving an indication of how you manage your money, showing the number of loans and credit arrangements taken out, as well as any outstanding balances for active ones.

Banks, building societies and finance companies provide the monetary information, with other details such as your date of birth and address history being sourced from the electoral register. 

Also included in the report will be anyone else you are financially connected to, such as joint accounts, mortgages, business partners or joint court judgements.

Crucially for lenders, the report logs all late or missed payments on existing or past finance arrangements, as well as legal matters such as County Court Judgments (CCJs).

Other relevant information includes whether your home has been repossessed and if you have been declared bankrupt or entered into an Individual Voluntary Arrangement (IVA).

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What isn't shown on a credit report?

Although credit reports include a wealth of information to guide lenders about whether or not you represent a financial risk, it is only a record of when you have borrowed money, with one exception — student loans are not shown.

Other factors which would influence your ability to pay a loan back, such as your salary, details of savings accounts or your current account balance do not appear on it.

Similarly, if you have fallen into arrears with your council tax or have a criminal record, then those details are not revealed by a 'hard' credit check.

How can I check my credit score?

There are numerous online options for checking your own credit report, all of which offer a free check as they are legally obliged to.

While some will show your complete report free-of-charge, others require a subscription payment if you want to view more details. Usually, there's a 30-day free trial, though — just remember to cancel your subscription before the time is up if you don't want to be charged.

What information will I need to check my credit score?

Checking your own credit report is simple, although be aware it usually involves creating an account with the company providing it.

Typically for over-18s, your full name, date of birth and addresses over the past three years are all that's required, but some services may request mobile phone numbers and your mother's maiden name.

To help verify your identity, you will also be asked details relating to your bank accounts, any credit cards and your mobile phone network, so have those details to hand in advance for ease of reference.

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Which credit check companies offer free of charge reports?

You have the legal right to view your credit report free of charge from any credit check company.

ClearScore, CreditWise, Intuit Credit Karma and TotallyMoney let you view your whole credit history free on an ongoing basis.

Of the main credit check agencies Checkmyfile, Experian and Equifax have more detailed subscription services which carry a charge once the 30-day free trial has elapsed.

Cancelling your subscription before this period ends ensures you won't be charged, meaning you can get a detailed report without paying anything. 

Credit Check Company Details Price after
ClearScore Free for full report Free
CreditWise Free for full report Free
Intuit Credit Karma Free for full report Free
TotallyMoney Free for full report Free
Experian* 30 day free trial, monthly subscription £14.99* a month
Equifax 30 day free trial, monthly subscription  £14.95 a month
Checkmyfile* 30 day free trial, monthly subscription  £14.99* a month 

Free trial periods are usually only for new customers

Checkmyfile  Logo (5)

Describing itself as the UK's highest ranked credit report provider on TrustPilot since July 2015, Checkmyfile uses data from four credit reference agencies — Experian, Equifax and TransUnion — giving a credit score out of 1000.

Privately owned and independently operated. It also says it doesn't sell your information on to other businesses.

How much does a Checkmyfile credit check cost?

You can get a 30 day free trial after which there is a subscription cost, atlhough this can be cancelled whenever you choose.

The report includes an online tool allowing you to remove inappropriate people from your Equifax, Experian and TransUnion files. It includes support from professionally qualified Credit Analysts who will guide customers through the process at each Credit Reference Agency.

Product

Monthly Cost

Details

Multi Agency Credit Report*

£14.99

Free trial for 30 days 

ClearScore*Clear -Score -logo -2-1

ClearScore, as its name suggests, is designed to make the world of credit scores simpler and easier with an easily understood credit report. Although acquired by Experian in 2018, it has remained free to use. It gives a credit score out of 700 and, as well as the website, there's a ClearScore app.

How much does a ClearScore credit check cost?

ClearScore is free to use and gives you a full report. It's updated monthly and you can check it as often as you like. It shows six years of your financial details with full explanations.

Product

Monthy Cost

Details

ClearScore Credit Report & Score*

Free

Credit report and score updated monthly 

CreditWise Creditwise Cap One _Lock Up .0 (1)

CreditWise is part of Capital One and its credit score is provided by Equifax - so it's scored out of 710. It's free to get a credit report and you don't have to be a Capital One customer.

How much does a CreditWise credit check cost?

CreditWise provides a free credit check service with your report and score updated once a month. You can also get a notification when your credit score changes. 

 Product

Monthly Cost

Details

CreditWise Credit Report & Score

Free

Credit report and score updated monthly 

Intuit Credit Karma 23ef 59f 304288c 6c 9962d 5eef 5f 84806_h 0vi 5xo 8ip 48cg 5mvs 9a Copy

Intuit Credit Karma may be a new name when it comes to credit checks but the company was previously called Noddle and before that TransUnion and Callcredit. It gives you free access to your credit report with no monthly plans.

It makes its money by taking a small commission from product providers for any customer who uses its site and takes out a product, such as a credit card.

How much does a Credit Karma credit check cost?

A Credit Karma credit check is free and there's no monthly subscription service. It includes a list of your credit accounts (bank account, credit cards, loans and mortgages), a six-year payment history showing whether you have made repayments on time and in full, plus details of who has searched your credit file in the last two years.

Product

Monthly cost

Details

Credit Karma Credit Report & Score

Free

Credit report and score updated every seven days

ExperianEacbd 823-7ffc -48bf -aaa 4-fc 98afbc 1ef 9-Experian _-_logo_

Experian is probably the best known credit check company in the UK. It works with the big credit providers including Barclaycard, Halifax and Santander. Setting up an account costs nothing and additional services include showing you your mortgage eligibility from a selection of lenders.

How much does an Experian credit check cost?

You can get a free account at Experian which shows you a credit score (out of 999) and will give you an eligibility rating before you apply for credit cards and personal loans.

There are two paid for products — CreditExpert offers a daily Experian credit report and score, UK call support and credit report alerts along with web monitoring and dedicated fraud support. Identity Plus gives you a daily Experian fraud report, web monitoring, dedicated fraud support and fraud alerts.

Product 

Monthly cost

Details

Free Experian account

Free

-

CreditExpert*

£14.99

New customers qualify for a 30-day free trial

Identity Plus*

£10.99

New customers qualify for a 30-day free trial

Equifax  Equifax .svg

Another well-recognised name in the UK, Equifax was the first company to give UK consumers online access to their credit reports back in 2002. Its score levels range from very poor (0-279) to excellent (over 466). This gives you an indication of how creditworthy a lender may find you, if you’re applying for credit.

How much does an Equifax credit check cost?

As with all the providers, you can view a copy of your statutory credit report online (for 30 days). Continuing with a more detailed Equifax Credit Report and Score subscription has a cost but you can cancel it at any time.

 Product

Monthly Cost

Details

Equifax Credit Report & Score

£14.95

Free for the first 30 days

TotallyMoney Totallymoney

TotallyMoney is another provider that doesn't charge for a credit check. Your credit report is free and is scored out of 710. It will also show you comparisons of credit cards, loans and mortgages based on your score. 

How much does a TotallyMoney credit check cost?

There's no fee to get your credit report from TotallyMoney. Instead it makes its money  by receiving a commission if a customer clicks through to apply for a credit card or similar.

Product

Monthly cost

Details

TotallyMoney Credit Report & Score

Free

Credit report and score updated monthly 

What is a credit score?

Your credit score is shown as a number out of a maximum possible figure, such as 857/999 or 524/700. The closer your score is to the maximum, the higher it is.

This number gives lenders a snapshot as to your risk level as a borrower and ultimately whether they will accept your application.

Experian uses a rating out of 999 with the following scale:

Experian score
961-999 881-960 721-880 561-720 0-560
Rating
Excellent Good Fair Poor Very Poor

Equifax uses a rating out of 700 with the following ratings:

Equifax score
467-700 420-466 367-419 279-366 0-278
Rating
Excellent Good Fair Poor Very Poor

Noddle (also called TransUnion and Callcredit) has an unusual system with a rating out of 710:

Noddle score
628-710 604-627 566-603 551-565 0-550
Rating
Excellent Good Fair Poor Very Poor

Different loan providers have different criteria when it comes to accepting applications — just because you don’t meet one's criteria doesn't necessarily mean you won't be approved by another.

Not only will your credit score influence whether or not your application is successful, it may also affect the rate of interest owed on approved loans.

Why isn't my score the same with different credit check companies?

Each credit check agency uses different scoring methods meaning your overall score is likely vary between them — that's normal.

What is far less useful is that it's nigh-on impossible to directly compare like for like — Experian's maximum score is 999, while bafflingly, Intuit Credit Karma's rating goes up to 710.

More important is how each credit check company rates your score in terms of poor, good or excellent. This is what will be important to lenders who want to assess your application, rather than the specific number.

All the big high street banks, building societies and credit card companies share their data with the three major credit reference agencies — Experian, Equifax and TransUnion (also called Noddle), so the majority of the information on your report should be the same.

There may be some differences as smaller lenders, such as payday loan companies, may only share information with one credit reference agency.

Why is my credit score low?

We're not saying credit scores are a dark art, but there are certainly lots of different factors that can affect your score.

You may have never been in debt and paid all your bills on time but that doesn't necessarily mean you will have a good credit score.

While your payment history — in other words, whether you have paid your bills on time — is the biggest single influence on your credit score, it usually only accounts for up to 40% of your overall rating.

Each individual financial arrangement will also make a difference. A very high balance on one credit card can be seen as a risk, for instance, the theory being that other credit cards you have may follow suit.

There is also your utilisation rate, often called your debt-to-limit ratio. This shows how much you are using your credit limits — it's essentially the ratio of your credit card balances against the credit limit of those cards. So even if you haven't missed a payment, a high utilisation rate can be an indicator that you're at risk of defaulting on a payment.

Other factors include the length of your credit history. A shorter credit history means there's less data on which to base a score about how you manage your finances, which can mean a lower score. This is frequently a factor for older people with little to no history of having loans or buying items on credit.

How can I improve my credit score?

The higher your credit score, the more likely you are to be accepted for finance — and crucially the lower the rate of interest that you'll be offered. On financial arrangements such as PCPs, this can make a big difference.

Improving your credit score isn't an overnight process. It will take time to elevate your rating — your credit report covers the last six years and it can take up to three months to start seeing improvements.

The easiest things to do are to check your details, such as making sure you're on the electoral register — you don't need to wait for elections, you can do it here. If there any mistakes or innaccuracies on your credit history, get them corrected.

There are plenty of obvious things to do too such as ensuring you are keeping up payments to your accounts. This will show lenders you're a reliable customer. Keeping your credit utilisation low will help too — this is the amount of credit you have used as a ratio of your credit limit.

So for example, if your credit limit is £2000 and you have used £1000 of that, your credit utilisation is 50% cent. Ideally you want this to be under 25% to increase your score.

If you have a low score due to generating little credit history, you can build this up by getting a credit builder credit card. These usually have low credit limits and a high APR, but pay it off every month on time and you will see your rating increase.

There are other tips such as not withdrawing cash from credit cards and avoiding paying for car insurance monthly. Not only do they charge you more but it involves a 'hard search' which will affect your credit score. 

Remember, what you are attempting to do is show any potential lender that you are reliable and low risk.

Can mistakes on my credit report be fixed?

Although rare, you may find mistakes or even a fraudulent activity on your credit report — it's vital to get these sorted quickly.

A credit report is not set in stone and information can be changed if it's incorrect. Remember, the credit report is just that — a report — the information has come from various sources and it is they who will have to be contacted to resolve any problems.

Handily, most credit check companies will contact organisations on your behalf, while making a note on your credit report that an entry is being questioned. If the company agrees to the changes, then your credit score will likely increase. The credit check firm has 28 days from your request to tell you if it has removed the entry, amended it, or taken no action.

If they don't or refuse to make changes, you can add what is called a Notice of Correction to your report with your comments — useful if you want to explain something such as a sudden illness that meant you missed a credit card payment. If you want to take it further, you can escalate it to the Information Commissioner’s Office.

Should you wish, there is nothing to prevent you from contacting any banks, building societies or credit card companies yourself if you think information is wrong. It's also very straightforward to contact your local Electoral Registration Office, if there's an issue with your address details.

Is there a minimum credit score for car finance?

There's no hard and fast rule when it comes to a suitable credit score for getting finance for a car. It depends on what kind of finance, such as whether it would be a car loan or a PCP, and the finance provider arranging the package for you.

While there's no specific minimum score for getting credit to buy a car, if you have anything below a Fair credit rating, you may struggle to get your application accepted.

Even if your application is successul, it's also important to remember that the lower your credit score, the higher the rate of interest you will be offered. 

Will applying for car finance affect my credit score?

Yes! A car finance application will result in a 'hard' credit check and will be recorded on your report the same way a mortgage or credit card application would. 

Remember, the more credit applications you make, the more 'hard' checks will appear on your credit report and your score will reduce as a consequence.

If you're turned down for credit by one lender, don't apply for any more finance until you have checked your credit report to find out the reasons. Ignoring that advice will only worsen your score further.

Can I still buy a car with a poor credit rating?

Yes you can, but be prepared to suffer when it comes to the rate of interest you'll be paying. The best deals are unlikely to be available to you, so searching for a car finance deal can be frustrating — the very attractive headline figures are only representative, meaning and the actual APR is dependant on your credit score.

This doesn't mean you can't get finance for a new car, but it means there will be less choice and you will have to pay more in interest. It's better trying to improve your credit score first and remember that repeated hard checks will negatively affect your credit score, so do all you can to avoid them.