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  1. UK Information
  2. UK Car Classifieds
  3. UK car finance, car loans and credit
  4. Car Finance Glossary
  5. Car loan credit checks

Car loan credit checks

Before a lender gives you a loan, they need to be satisfied that you are able, and willing, to pay back the loan. In order to do this they will run a credit check to check your 'credit scoring'.

Credit scoring is based on a number of factors such as:

  • county court judgements (CCJs) against you
  • debts registered over the previous six years
  • defaults on other loan payments or a mortgage
  • unpaid credit card debts

You will be asked details such as home, mortgage, income, bank and credit card accounts and details of any other outstanding debts. This information is used, by a credit reference agency, to check your identitiy and search public records for financial information about you. Any information on you shared by finance companies, banks and other lenders will be assessed. At the end of this process you should get a yes or no answer.

If you are refused credit, all is not lost. Here are a few things you can do.

  • The formulas for credit scoring is similar, but lenders may have different loan policies. If one lender turns you down, another may accept you.
  • If you are a high risk borrower or have a bad credit history, such as unpaid debts or CCJs, then you are likely to be charged a higher rate of interest for your loan.
  • Ask the finance company why your application was turned down, and whether you have failed the credit checks. If you have failed a credit check, but feel that you should not, you can check your record at the relevant credit reference agency and to correct any errors in your record.

If you have a possible problem with your credit record, avoid running a number of credit checks. These can come up as a large number of bad credit checks against your name - making obtaining credit even more difficult in the future.