Everything you need to know about credit checks
What is a credit score?
Your credit score is important as it is an indication towards your financially history and if you can be trusted to pay back any credit in the future. Potential lenders will usually check your credit score to decide whether or not they want to offer you finance. We take into account your credit score but also other factors such as income and affordability to get you approved! Your credit score is affected by a few different main factors.
Why choose us?
- Soft search credit check
- 98.4% approval rating
- Your own personal car finance expert
- No deposit options
- No guarantor finance
- Get any car from any UK dealership
- Flexible repayment terms
- Pay nothing for up to 6 weeks
- Fixed interest rates
- No hidden fees
Your credit score is made up of a few main factors:
- Payment history. This is probably the most important factor in credit scoring. Lenders want the assurance that you will pay back your credit or finance on time and in full, so even one missed payment on your credit file can have a detrimental effect to your score.
- Credit utilisation. It is advised that you keep your credit utilisation ratio below 50%. This means that out of the total amount of credit you have available, you should limit yourself to only using 50% of it. For example, if your credit limit was £1000, you should only use about £500 of that. Maxing out credit cards, store cards etc can decrease your score.
- Length of credit. Having credit for a long time is not a bad thing if you pay it off each month. For example, a mortgage will be recorded on your credit file and is usually paid off in 25 years (on average). However, opening multiple new accounts in a short period of time can harm your score.
Why should I check my credit?
It is recommended that you get into the habit of checking your credit file and credit score every month. Before you apply for finance, it is advised that you check your credit report. You can check your report fro any mistakes or information that is not up to date and contact your credit referencing agency to get it fixed. This can increase your chances of getting approved too. Got bad credit? Don’t worry, even if you check your file and your credit score is a little on the low side, Refused Car Finance can help!
What is a credit check?
Soft search credit check
A soft search credit check is when potential lender is able to view part of your credit file without leaving a mark. When you apply for finance with Refused Car Finance, we only provide a soft search on your credit file. We just take a quick look at your credit file to see where you fall on our scale and then along with your affordability, we match you up with the most suitable lender for you! A soft search is great as it is not recorded on your credit file and doesn’t harm your current credit score.
Hard search credit check
A hard search is performed when a lender wants to look at your full credit file. You will usually be notified on a website application form that you are about to perform a hard search that could affect your score. Each time a hard search is conducted, it is recorded on your credit file and also lets lenders know the outcome of this application e.g. whether you were accepted or declined for finance. You should also be aware that making multiple applications with a hard search in a short space of time can negatively impact your credit score. If possible, its best to stick to soft search applications only.