Whether people are looking for car finance, a car loan or any other form of financial package or credit arrangement, one thing is certain to raise its ugly head for a huge and growing number - the credit history.
Credit scores, credit ratings and credit histories are all ways of describing the millstone carried by millions of us in this country who have, for one reason or another, fallen foul of the credit companies and fortune, and either missed payments, paid bills late, accumulated arrears, defaults and even county court judgements (CCJs).
As a direct result of the recent financial crisis experienced globally a vast proportion of us are now in the position where our credit histories are marred in ways we cannot alter, and which are now preventing us from obtaining credit.
In some cases this may be no bad thing, but when it comes to car finance it's a whole different story. Whether for your family or for work, public transport is simply not flexible or reliable enough, and in many cases is simply impossible.
Short of giving up on your job and staying at home sealing envelopes, you will inevitably find you need a new vehicle. But getting a car loan or finding cars on finance is virtually impossible because of the credit rating that almost seems to be tattooed on your forehead as though warning any financial institution you approach that you are 'unclean'!
But if you're in this position, looking at bad car finance, cheap car finance or just any kind of car finance so long as you can become mobile, then before you leap into the arms of a loan shark or pursue the wrong type of guaranteed car finance arrangement, let's consider a few common misunderstandings and myths relating to credit histories, credit scores and credit ratings, and what your options are in terms of either getting cars on finance or comparing car finance deals that may not just be possible, but actually beneficial.
First of all, there's no such thing as a credit score. Despite what you may hear, you do not have a credit score. There is no number stamped on your credit history. Scoring is something carried out by financial institutions you approach for credit, but this is their own procedure, based on their own parameters and methods.
One company may come up with an entirely different score to another - there is simply no set pattern, no set formula and no set score. This means that being declined by one lender does not necessarily mean you'll be declined by all lenders, since some may use a more generous formula to calculate your rating.
Another common myth is that the more applications for credit you carry out the lower your credit rating. When a company carries out a credit check on you a footprint is left on your credit history. However, this in itself doesn't lower your credit rating or cause any problems as far as applying for car finance or other credit is concerned. The footprint only states that a search was carried out. It doesn't state the purpose, nor whether the application was accepted or declined, nor whether you took up the offer if it was accepted.
However, a car finance company will clearly be a little anxious if they carry out a credit search and discover that earlier that same day you applied for car finance or a car loan with twenty other firms. Clearly if even a quarter of those applications were successful you could find yourself with five car loans in a single day, and this would not encourage a car finance company to believe you'll be able to keep up on the repayments, which is why you're likely to be declined. However, spacing apart your applications will be fine.
Some people have investigated the idea of guaranteed car finance, and this is a great option for two reasons, Firstly they only use your credit history as a way to prove who you are. They're really not bothered about any missed payments, arrears, defaults or even CCJs. Instead they look at your current earnings and expenses, and see what you can afford.
The second advantage of guaranteed car finance is that as long as you make repayments on time, every payment will be recorded on your credit history helping to boost your overall rating.
However, just make sure if you are going to try to repair your credit history and get yourself mobile again through a guaranteed car finance scheme that you use a car finance firm which allows you to use the car loan to purchase any car you like from any dealer you like, rather than limiting you to a car from their own forecourt.
![[Valid RSS feed]](http://www.articlelayout.com/images/icon_Rss.png "XML Feed For RSS"){kind=icon}
Category Rss Feed
Print This Article
Add To Favorites
