Car Finance for Near Prime Credit Profile

Having a near prime credit score is common for the average car buyer. In fact, the near prime status falls between prime and subprime, so people with this credit status have average or fair credit scores. Are you looking for near prime car finance deals? Let’s explore the ways you can improve your credit score so you can get better deals and rates. 

What is a Near Prime Credit Score?

A near prime status is exactly that - you’re close to having a prime credit score. When you have a prime status, that means you’re qualified to get the best interest rates if you want to get car finance or a loan. Being just near prime is a good starting point because it means you can do something to improve it. So don’t be discouraged. Instead, start planning on how you can get a higher credit score. 

Why Do I Only Have a Near Prime Score?

Individuals with credit scores that are not very good have deep subprime or subprime status. Average credit scores are categorised as near prime, and then for those with excellent scores, they can either be prime or super-prime. 

If you’re wondering why you have just a near prime credit score, you may want to assess your credit utilisation rate. Do you have a huge credit card balance or you’ve maxed out your credit limit? Have you missed some payments for loans or bills in the past? If so, then it is probably why you only have an average credit score. 

But don’t worry because you’re so near to earning an excellent credit score. You need to improve some habits concerning your finances and make sure you pay your bills on time. Other than that, you may want to give your credit cards a break every now and then so you can reduce your credit utilisation rate. 

How to Work Your Way Up to Prime Status

When you have a near prime credit score, you have a higher chance of getting car finance compared to borrowers who have a subprime status. But if you want to access financing with better interest rates, you can take steps to work on your credit score so you’ll gain a prime status. 

Register to Vote

Register in the electoral roll so that your information will be verified. Credit reference agencies will include such details to your credit record and will also add some points to your credit score. When lenders evaluate your car finance application, they will also check your address history. Having a verified address through the electoral roll registration will add points to your trustworthiness as a borrower. 

Ensure On-time Payments 

Among the most crucial factors that impact your credit score is your track record when it comes to making payments. If the goal is to improve your credit score, then you need to pay your bills on time every time. In case you frequently forget when the due dates are, it’s best to arrange an autopay linked to your account so that your bills can automatically be paid on time. 

Try to Make Full Payments

It’s okay if you can afford to pay only the minimum amount on your credit card bill. However, since you want to get a prime credit score, you should try to pay the full amount whenever you can. By doing so, you can avoid having a balance on your credit card. Keep in mind that your credit card balance will get higher with interest over time so it’s more practical to pay everything in full every month. 

Maintain a Few Credit Cards Only

Having a credit card is necessary so you can build your credit history. If you have a few lines of credit, try not to add any more. Too man applications within a short period will hurt your credit score because of the hard inquiries that financial institutions need to make on your credit record. Maintain what you have and make sure that you make payments on time. 

If you currently have too many credit cards, choose the ones with the lowest interest rates. You can pay off the balance on those with higher rates and then close them. This will also keep your credit utilisation rate low. The key to getting a better credit score is maintaining a good credit record so try not to miss any payments. 

What’s a Good Score to Get Car Finance?

There are three major credit reference agencies in the UK - Equifax, Experian, and TransUnion. Each of these agencies has its own way and system of scoring. You can have a different score on each one of them. Ranging from excellent to very poor or super-prime to deep subprime, the numbers can vary for these three agencies. 

For example, with Equifax and TransUnion, their credit scores range from 0 to 700. If you have a score near 700, then that’s a good rating. And of course, if you’re closer to zero, then that’s a bad credit score. With TransUnion, a good score ranges from 604 to 627. For Equifax, however, you can get a score from 420 to 465 which may seem lower but that’s a good range for them. As you can see, these agencies have different score systems. 

A near prime or average score means you may have a score ranging from 566 to 603 with TransUnion, or 380 to 419 with Equifax, or 721 to 880 with Experian. While you may still get car finance with just a fair credit score, it may have a higher interest rate. The best step to take would be to improve your credit score first, and when you’re already in prime status, that’s when you apply for car finance. 

Takeaway

If you’re not in a hurry to buy a car, take time to work on your credit score so that you can get better car finance deals. You’re so near to getting prime status that it won’t take a long time to get there. Just remember to maintain a low credit utilisation rate and make on-time payments every time.