What Affects Your Credit Score

In today’s financial landscape, your credit score is pivotal in determining your eligibility for various financial products, including car finance. Whether you’re considering purchasing your dream car or upgrading to a more reliable vehicle, understanding what affects your credit score is crucial.

This blog post will delve into the intricacies of credit scores, shedding light on what can positively or negatively impact your creditworthiness when applying for car finance in the United Kingdom.

What Is a Credit Score

A credit score is a three-digit numerical representation of your creditworthiness. This score reflects your financial history, mainly how you’ve managed credit and debt responsibly. 

Lenders use your credit score to assess the risk of lending you money. The higher your credit score, the more likely lenders will approve you for loans, credit cards, and other forms of credit, including car finance.


What Is a Credit Score

✅ What Is Good for Your Credit Score

  1. Timely Payments: Consistently making payments on time is one of the most significant factors that positively affect your credit score. Whether it’s credit card bills, loans, or other forms of credit, paying on time demonstrates your reliability as a borrower.
  2. Credit Utilization Ratio: This ratio represents the amount of credit you use compared to your total available credit. Keeping your credit utilization below 30% is generally advisable, as high utilization can signal financial strain.
  3. Length of Credit History: The longer your credit history, the more trustworthy you appear to lenders. Therefore, keeping older accounts open and in good standing can enhance your credit score.
  4. Variety of Credit Types: A diverse mix of credit accounts, such as credit cards, instalment loans, and mortgages, can have a positive impact on your credit score. However, only apply for new credit when necessary, as multiple inquiries can temporarily lower your score.
  5. Public Records and Collections: Avoiding bankruptcies, foreclosures, and collections is crucial for maintaining a healthy credit score. These negative marks can severely damage your creditworthiness and remain on your credit report for several years.
  6. Register To Vote at Your Current Address: Registering to vote helps companies to confirm your identity and where you live.

❌ What Is Bad for Your Credit Score

  1. Late Payments: Missing payments or consistently paying late can significantly lower your credit score. Lenders perceive this behaviour as a sign of financial irresponsibility.
  2. High Levels of Debt: Carrying excessive amounts of debt relative to your income can negatively impact your credit score. It suggests a higher risk of defaulting on payments.
  3. Applying for Multiple Credit Accounts: While seeking credit is essential for various financial needs, applying for multiple credit accounts within a short period (especially if done irresponsibly) can lower your credit score temporarily.
  4. Closing Old Accounts: Closing old and well-maintained accounts might seem like a good idea, but it can shorten your credit history and potentially lower your score.
  5. Foreclosures and Bankruptcies: These major financial setbacks can severely damage your credit score, making it challenging to secure favourable car finance terms.
  6. Having No (or a Limited) Credit History: Lenders like to see a sensible borrowing record, so it’s worth building this up to help increase your score.

What Doesn’t Affect Your Credit Score

  1. Checking Your Own Credit Report: When you check your credit report, it’s considered a “soft search” and doesn’t affect your credit score. 
  2. Income Level: Your income doesn’t directly impact your credit score. However, lenders may consider your income when assessing your ability to manage new credit.
  3. Employment History: Like income, your job history doesn’t factor into your credit score. However, having a stable job can positively influence lenders’ decisions.
  4. Marital Status: Your marital status and the credit history of your spouse or partner are separate entities and don’t impact your credit score.
  5. Savings and Investments: While your savings and investments demonstrate financial responsibility, they aren’t reflected in your credit score. Credit scores focus on credit and debt management.
  6. Your Homes Previous Occupants: The activity of previous occupants at your home address isn’t linked with your credit score.
  7. The Activity of People You Live With: Living in the same house with someone isn’t a financial link unless you share a joint mortgage. Sharing the rent doesn’t count.

How To Build or Rebuild Your Credit

If your credit score isn’t where you want it to be, there are steps you can take to improve it:

  • Make Timely Payments: Consistently paying your bills and credit accounts on time can gradually improve your score.
  • Reduce Credit Card Balances: Pay down existing credit card debt to improve your credit utilization ratio.
  • Use Different Types of Credit Responsibly: A mix of credit types (credit cards, loans, etc.) can be beneficial, but only take on what you can manage.
  • Avoid Closing Old Accounts: Keeping older, well-maintained accounts open can positively impact your credit history’s length.

What Does a Credit Score Look Like

Credit scores in the UK are typically categorised as follows:

Image of the Experian Credit Score
  • Excellent (800–850:) Your borrowing limits are higher, with lower interest rates, and your finance application will likely be approved.
  • Very Good (740–799): You may not get the best deals. However, you are likely to get approved for finance.
  • Good (670–739): You might get OK interest rates, but your credit limits may not be very high.
  • Fair (580–669:) Your borrowing limits will be lower, with higher interest rates. Only specific lenders are likely to approve your finance application.
  • Poor (300–579): You’re more likely to be refused finance except for certain circumstances.

*note that this is a guide and may differ for individual circumstances.

Benefits of Using a Finance Broker on Your Credit Score

Single Application

One of the significant advantages of using a car finance broker is that they can submit your application to multiple lenders on your behalf. This means that instead of making numerous applications with various lenders, which could lead to multiple hard inquiries on your credit report, the broker’s single application can minimize the number of searches, thus reducing the potential negative impact on your credit score.


Car finance brokers are experienced professionals who understand the lending landscape and can match your financial profile with the most suitable lenders. This can increase your chances of getting approved for car finance with favourable terms. Since they know which lenders are more likely to approve your application, they can help you avoid unnecessary rejections that might negatively impact your credit score.

Get in touch to get a personalised car finance quote →

Other Things To Consider

Regularly Checking Your Credit Report

It’s crucial to regularly monitor your credit report for errors or discrepancies that could negatively impact your credit score. The law in the UK allows you to access your credit report for free from credit reference agencies like Experian, Equifax, and TransUnion. Reviewing your report can help you identify and rectify any inaccuracies promptly.

Impact of Joint Applications

If you’re considering applying for car finance with a partner or family member, keep in mind that their credit history and score will also be considered. If your co-applicant has a significantly lower credit score, it could affect the terms and interest rates you’re offered.

Seeking Professional Advice

If you need clarification on your credit situation or how to improve it, consider seeking advice from a financial advisor or credit counselling service. These professionals can offer personalized guidance tailored to your unique financial circumstances.

Patience and Persistence

Improving your credit score takes time and consistent effort. Be patient and stay persistent in your efforts to manage your credit responsibly. Over time, your actions will reflect positively on your credit report and score.


When seeking car finance in the UK, understanding what affects your credit score is essential for securing favourable terms and rates. Timely payments, prudent credit utilization, and positive credit history are the pillars of a healthy credit score. Conversely, late payments, high debt levels, and negative marks like bankruptcies can lead to a lower credit score and more challenging approval processes. 

Remember that checking your own credit report, income level, employment history, marital status, savings, and investments don’t directly impact your credit score.

In the competitive landscape of car finance, a strong credit score can make all the difference. By actively managing your credit and making informed financial decisions, you’ll be well on your way to driving your desired vehicle with confidence and financial stability.

Get in touch and let us save you time, money and effort getting you the car of your dreams.
info@dorsiafinance.co.uk | 01522 420 420

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