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How does credit affect car finance
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How does credit affect car finance

Car finance is quite a simple process; it allows you to afford the car of your dreams, without having to pay a large lump sum upfront to buy it. Financing a car lets you spread the cost of your new car over a set period ...
Fahad Hussain
May 2018
How does credit affect car finance

How Credit Score Affects Car Finance

Car finance is quite a simple process; it allows you to afford the car of your dreams, without having to pay a large lump sum upfront to buy it. Financing a car lets you spread the cost of your new car over a set period of time, making the amount manageable. When the lease term is over, depending what kind of lease you choose, you can either walk away with the car because you’ve paid off the whole amount (Hire Purchase Lease), give the car back because you’ve only been ‘renting’ it (Personal Contract Hire) or choose to pay a balloon payment at the end to own it (Personal Contract Purchase).

Whichever car you are looking at, or whichever finance you are looking to apply for, an important and mandatory part of the car leasing process is a credit search. A credit search will provide the finance company with details of your credit score, and this is what will affect your chance of getting a car lease. It will let the lenders know how financially secure you are. That doesn’t mean that you have a lot of money, but rather, how good at repaying loans and finance you are.


Your credit score is based on your credit report and history. When you apply for any type of finance or loan, be it a credit card, mortgage, personal loan or car finance, the lenders will check your credit score to decide whether they want to give you the loan or not.

If you have always kept up with all payments you’ve had to make with any sort of finance, it’s likely you’ll have maintained a good credit score and you’ll be more likely to get approved. Higher credit scores show a higher probability that you will pay back the loan and make your payments on time, which indicates to lenders that you’re a lower risk than someone with an adverse credit score.

Bad credit score – If you have consistently missed financial payments, and have gone into arrears, have CCJs or have had judgments towards you, your credit score will show this. It will be much harder to then get another company to offer you finance.


As with any other financial lender, it will all depend on your credit score to determine how much the financial company want to lend you. There is no exact credit rating that will guarantee you a certain loan. In fact, it is all personal and even some people with bad credit will still be able to take out car finance. However, the score does make a difference when discussing car leasing options and payments;

If you have good credit;

  • You’ll be more likely to be approved – lenders will see that you are more likely to stick to the financial agreement, as you’ve proved that you have done so in the past.
  • You’ll have more options for cars and leases – you’ll have access to all the best deals from the car leasing companies, as many are based on good credit scores.
  • Lower interest rates – Those with great credit scores will normally qualify for low-interest rate loans and in some cases may even qualify for 0% financing.
  • Deposit size – Those with good credit will benefit from lower deposits or even no deposits at all, because they are less risky to lend to, and the lenders trust that they will upkeep their payments.

If you have bad credit;

  • Harder to be approved – if your credit report show missed payments and have CCJs, it will make you a risk to lend to. Financial companies will be reluctant to trust that you will repay their loan back so they might not approve your request. It is harder, but by all means not impossible
  • Higher interest rates – If they do decide to lend you the money for a new car lease, it’ll come at a price. You will have to pay higher interest rates than if your credit was good. This will still allow you to lease a car and pay monthly for it, and will still be cheaper than buying a car outright
  • Larger deposits – If a company can get a good chunk of the money being lent initially through a large deposit, they’ll be much more inclined to offer you the loan as it’s less risk and money for them. Saying that we also have many adverse credit lease cars available with no deposits too


Every time you take out a loan, it is added to your credit report. There, other lenders will be able to see how good you are at repaying loans. When you take out a car lease, you will be paying monthly payments for 2-4 years, depending on your lease terms. If you make every payment, on time, this will show financial companies that you are capable of paying back loans and in turn, will improve your credit score.


Yes, absolutely, we deal with many people from all financial and credit backgrounds. Each lender will have different criteria and your credit score will be treated differently by each financer. If applying for a car lease through someone like Hippo Motor Finance, you’ll be sure that we’ll put your request forward to a huge range of lenders and leasing products, many of which deal with adverse credit. Since we specialise in bad credit car finance, we have many options available, even some no deposit deals.


When you apply for car finance through Hippo, we will do a credit check for you. We will then let you know, as quickly as possible, if you have been approved for car finance.

You can also check your score yourself online, through websites such as Experian, Callcredit and Equifax.HOW CAN I IMPROVE MY CREDIT RATING?


  • Check your rating yourself first – It’s good to check what your report is like before you get it checked by lenders. This will allow you to know what to expect, and also check that all the details are correct. Every time a credit lender checks your credit score, it adds a ‘footprint’ to your report. These are often called ‘hard checks’. It doesn’t look good if you’ve had many hard checks and applications for credit. It’s better to check yourself, known as a ‘soft check’ and you can do this as many time as you like without it affecting your rating.
  • Register on the electoral role – Registering yourself on the electoral roll is a really quick and easy tip, as it helps lenders trace your address history and reduce the possibility of making a fraudulent application. You can register to vote online or by post.
  • Pay bills on time – It may sound simple, but this is the best way to improve your credit rating and show lenders that you can keep up with payments
  • Check every detail of the report – Even if a house number is wrong on one of your addresses, this could hugely affect your score. Make sure all details of the report are correct.
  • Fraudulent activity – check to see that all financial activity is yours and there isn’t anything fraudulent on there. Someone may have tried to use your name to order a credit card or online shopping without your knowledge. This will, of course, affect your score and you’ll need to get it removed ASAP.
  • County Court Judgements (CCJs) – if you’ve ever received a county court judgement for debt, it’ll have a serious impact on your credit score. Before you get to that stage, if you’re struggling to make payments, seek free debt advice to avoid these CCJs
  • Existing debt – If you have high levels of existing debt you should try and eliminate it before applying for new credit. Financial lenders might be hesitant about offering you more money if you already have a lot of existing debt.
  • Multiple addresses – Just be aware that lenders feel more comfortable offering loans and leases to those who have lived at few addresses, as it shows that you are more stable and secure.


We are car finance specialists who deal with ALL types of credit. We offer;

  •         Consideration of all financial circumstances
  •         Your own professional personal financial advisor
  •         Fast decisions
  •         No obligation quotes
  •         Exclusive low rates
  •         Part exchanges
  •         Low or no deposit deals

If you want to apply for car finance, head to our website or give us a call on 01254 956 777 today.

Check your Eligibility Rates from 12.9% APR. Representative APR 18.9%. We are a credit broker, not a lender. *a hard search will be performed if you decide to proceed