It will appear on your credit history, there shouldn’t really be much more to it than that, and it’s unlikely to have a significant effect on your score. However, the majority of people who buy new cars do so with some form of finance, which means lenders will need to perform a credit check to assess your financial situation before they agree to give you a loan. Problems arise when credit checks – or hard enquiries, as they’re sometimes called – are more frequent. This gives lenders an indication of your financial history and covers the likes of previous applications, the number of bank accounts you have, any other debt and whether or not you’re on the electoral roll. As a general rule, you should do your research and settle on the exact car you want to buy before you apply for finance.

This will give you a good idea of whether or not a finance company is likely to approve you for a loan. As far as lenders are concerned, someone who regularly applies for finance is cause for concern, so it’s a good idea to keep your number of credit checks to an absolute minimum. You can also do an eligibility check or a ‘soft’ check. Here, we explain the impact that buying a car can have on your credit score.

This is likely to be worse if you already have a poor credit rating. Lenders perform credit checks before they issue a loan to determine your suitability to receive finance. Credit checks can have an impact on your credit score, but the degree of that impact depends on your circumstances.

Will buying a car affect my credit score?

All manner of factors can affect your credit score. Almost all forms of personal finance will have an effect on your credit score, and buying a car is no different. If you’re a cash buyer (you already have the funds available to purchase the car outright), buying a car won’t affect your credit score.

We explain the impact of buying a car.


p>Different types of finance As a general rule, finance companies are more likely to lend money to candidates with good, high credit scores. Your credit score is a way for potential lenders to understand your history of paying off previous debts and whether or not you’re a good candidate for future forms of finance. It doesn’t tell you for certain, but it’s a good indication and doesn’t appear on your credit history, and therefore doesn’t affect your score. If you apply for finance a lot, each of those applications will appear on your credit history, and they can impact your credit score for the negative. It’s typically a number somewhere between 300 and 850, and the higher the figure, the better your track record for repaying your debts on time.

If you have a good credit score and have settled on the car you want to buy, the check should be more of a formality than anything else. This applies to everything from a credit card to a phone contract to a mortgage, and it’s exactly the same when you apply for car finance.