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Why a bad credit score can cost you over £35k extra when financing a car

Why a bad credit score can cost you over £35k extra when financing a car
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Thousands of drivers in the UK turn to finance every year to help with the cost of a new car. However, many drivers will be shocked to learn just how much their credit score affects the total cost of their car.

New research from price comparison and switching website has revealed that a bad credit score could end up costing you up to £35k extra when financing a car. Here is everything you need to know.

What exactly is a bad credit score?

A bad credit score is a negative assessment of your finances by a credit reference agency based on your history of borrowing and repaying money.

You are likely to have a bad credit score if you have a history of missed payments, defaults on debts, county court judgments or bankruptcies.

If you have a bad credit score, lenders see you as a higher risk borrower. This could mean that you will be rejected when applying for products such as loans, credit cards or mortgages.

Alternatively, it could result in you being charged significantly higher rates of interest for these products. According to lenders, the lower your credit score, the higher the likelihood of you missing payments. So lenders may raise the interest rate in an attempt to recoup their money as quickly as possible.

Each of the three credit rating agencies in the UK (Experian, Equifax and TransUnion) has its own scoring system. But since all base their scores on your financial history, you are likely to be given the same overall rating by all of them.

Experian credit scores range from 0 to 999, with a bad credit score falling between 0 and 720. Equifax scores range from 0 to 700, with a bad credit score ranging from 0 to 379. TransUnion gives your creditworthiness a score between 0 and 710, with a bad score falling between 0-565.

What does a bad credit score mean for car financing? used a car finance calculator to determine the cost of some of the UK’s most popular cars bought on finance by motorists with different levels of credit score.

Of the 50 most popular cars in the UK, the one with the biggest difference in the cost of financing for those with a bad credit score compared to those with an excellent score was the Land Rover Range Rover.

For a driver with a good credit score, the price of a Range Rover is £100,680 over a four-year term. However, a driver with a poor credit score will have to pay a whopping £136,189 for the car. That’s 35.27% (£35,509) more than someone with an excellent credit score!

Another car with a relatively big difference in the cost of financing for those with poor or excellent credit scores is the Land Rover Discovery. The cost of this car for someone with an excellent credit score is £64,066. The price jumps to £86,662 for someone with a bad credit score, which is a difference of £22,595.

But what about the UK’s most popular car, the Ford Fiesta? According to, the Fiesta costs £27,073 for someone with a bad credit score who buys it with financing. This is £7,059 more than the £20,014 someone with a good credit score would have to pay.

The full list of the 50 most popular cars in the UK and the cost of buying them on finance with different credit scores can be found on the website.

How can you improve your credit score to get better car financing rates?

Clearly, it pays to have a good credit score when it comes to car financing.

James Andrews, personal finance expert at, has a few tips for improving your credit score to help you get the best deal when buying a car on finance. These include:

  • Registering to vote
  • Making payments on time
  • Not applying for too many new credit products in a short period of time
  • Keeping a stable address
  • Using 30% or less of your total available credit per account
  • Checking your credit score regularly and confirming that everything is accurate

Andrews reckons that if you take these steps, you could see your scores start to improve in as few as four months. In a year, your score should be in a far stronger position.

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