Bad Credit Explained

Moneybarn is a specialist lender, working with customers who have a poor credit history to help them finance the vehicle they need. But what does ‘Bad Credit’ mean? How can it affect you? And what can you do to improve your credit score? We’ll try to explain…

a man looking worried by a computer

How does bad credit affect me when I need to borrow money?

Whenever you want to borrow money from a lender, they will run checks on your credit score to see if they will lend to you. They’ll base their decision on your credit score and their own lending rules on who they can lend to.

A ‘standard’ lender, such as a high-street bank, will often not lend to customers who they view as having bad credit.

We recognise that even if you have bad credit, you may still need to borrow money to afford a car, van or motorbike for your everyday needs, and particularly if you’re self-employed or you commute to work.

A couple reviewing their finances

Why do I have bad credit?

Your credit score is influenced by a variety of factors. You can improve it by sticking to the terms of a credit agreement, but it can be negatively impacted if you don’t stick to the agreement. This can be due to:

  • Missing a payment to your lender
  • Late payment on bills
  • Being declared bankrupt
  • IVAs
  • CCJs
Writing in a diary

What doesn’t impact my credit score?

There is a lot of misinformation and myths surrounding what affects your credit score. The following factors will not impact your credit score:

  • Previous occupants of your home address
  • Friends and family you live with (as long as you are not financially linked e.g. sharing a mortgage)
  • Soft search credit checks
  • Checking your own credit score

How do I check my credit score?

You can check your credit score with the main credit referencing agencies, Experian, Equifax, or TransUnion.

You can check a basic version of your credit report once a month using free services provided by these agencies, or you can sign up for a more in-depth monitoring service for a monthly subscription.

A note in a book reminding to check your credit report
A man checking his credit score

How can I improve my credit score?

You can improve your credit score by paying off your outstanding finance and/or by continuing to borrow money and making repayments on time, but this can take a while.

There are also other ways you can improve your credit score, for example by making sure you are registered on the electoral roll or by living at the same address for a long time.

Good & bad credit

What is a good credit score?

Exactly what constitutes a “good” credit score depends on which agency you use to look up your score, as each one has its own criteria.

Having a good credit score won’t guarantee you finance, because lenders look at different factors. However, as a general guide the main credit referencing agencies class the following scores as “good”.

  • Experian – 881+
  • Equifax – 420+
  • TransUnion (Callcredit) – 4/5

Can I get a loan with bad credit?

Having a poor credit record doesn’t mean you can’t get car finance (or a loan for a vehicle such as a van or motorcycle). But it may make it harder to find a lender that will accept your application.

As a specialist lender for people with bad credit, we’ve provided car loans and finance for thousands of people across the country to help them get the vehicles they need. Use our vehicle finance calculator to get an idea of which vehicle you might be able to afford.

We may even be able to lend to you if you have an Individual Voluntary Agreement (IVA) or a County Court Judgement (CCJ) in place. 

You might be on benefits and be wondering whether or not you can get finance. A common misconception is that you can’t get car finance on benefits. However, it is possible.

Apply today to see if we can help you.

Car dealership

Buying your next car

You want to make sure you purchase a reliable vehicle, which doesn’t break the bank. That’s why we’ve put together this helpful guide.

Being self-employed

We consider applications even if you’re self-employed and have bad credit so we might be able to offer you finance even if other lenders have rejected your application.

Our application process

It is important to completely understand the car finance agreement that you may be entering – find out more about how a conditional sale agreement works.