It is very important to understand what a credit score is and what your credit score is before applying for any type of finance. Not only do lenders look at your credit score when you apply for a car loan or any other type of finance, but it is also important to ensure you know what’s on your Credit Report and protect yourself from potential fraud, identity theft and errors.

What is a credit score and how do I find out what mine is?

According to Equifax, a credit score is a number that summarises the credit information on your credit report. It is an indicator of your credit risk and is used by banks and credit companies to help understand how responsible you are to lend to.

You can get a free copy of your credit score once per year on Equifax’s Get Credit Score website. It doesn’t affect your credit score and it allows you to see your credit score along with an insight into how lenders including financial, telco and utility providers may review your previous credit as part of a finance application.

Is there a minimum credit score to get a car loan?

Minimum credit score requirements differ between lenders, which means that there isn’t any minimum credit score to get a car loan. However, the higher your credit score, the lower the risk for a lender and the better the interest rates may be on offer to you. Loans For U have accreditations with over 40 of Australia’s most trusted bank and non-bank lenders and we have access to hundreds of finance products, some of which aren’t even available to the general public. Therefore, in most cases, we can secure a finance approval based on individual client credit scores.

Average Interest Rates Based on Credit Score Range

According to Experian, the average interest rate for a Prime Credit Score tier (credit score between 661-780) is 4.21%. The average interest rate for a Deep Subprime Credit Score tier (credit score below 500) is 13.97%. Interest rates may vary vastly depending on the lender, type of car, your overall profile and many other factors.

How to improve your credit score

For detailed information on what impacts your credit score and what you can do to improve your credit score, check out this article on 5 Things That Can Negatively Impact My Credit File.

How to get a car loan with bad credit

Yes, it is possible to get car finance if you have had previous defaults or have been knocked back by your bank or other lenders. It is also possible to get car finance if your primary income is Centrelink. For more information, visit our Bad Credit Car Loans page or speak to our friendly Car Finance Specialists today on 1800 538 287.