Understanding your credit score and how it works is extremely important because the health of your credit profile determines how easily you’ll be able to get that loan you want, that new car or even a mortgage. Looking after your credit score is an important life skill that will open you up to the best finance deals and make life’s little challenges a little bit easier.
Details of your credit history are kept on file by credit reference agencies. They use the information to decide how much of a risk you are to lend to. Certain things, such as missed or late payments will make it harder for you to acquire finance, although not impossible. In the case of car finance, the contracts can run for several years so lenders need to be sure of who they are dealing with. And they’ll also consider how likely you are to stick to the terms of your credit agreement.
In order to build healthy credit, you need to take out credit and make sure you stick to your agreement. Even if you’ve never needed to borrow money in the past this can actually put you in a worse position because potential lenders have nothing to go on when assessing your creditworthiness. You need to prove yourself to be a responsible borrower.
Additionally, if your credit score has suffered as a result of previous financial difficulty, that doesn’t necessarily mean you have no chance of being approved. Check out this guide to bad credit car finance by Stoneacre for more information.
If you’re looking for some ways you can repair your credit profile and improve your chances of getting the best finance deals then take a look at the infographic below and ensure you stay on the road to good credit.