Understanding Credit Scores: What Is A Good Credit Score?

What Is A Credit Score? 

A credit score is a number that shows how reliable you are at repaying borrowed money. In the UK, scores usually range from 0 to 999, depending on the credit agency.

How Do Credit Scores Work? 

Summary: Agencies build your score from your credit file. They look at things like payment history, credit utilisation, account age, and recent applications. Lenders also consider income, affordability, and their own criteria.

A credit score is like a financial report card. It's a number (usually 3 digits) that shows how good you are at managing your money. The higher your score, the better. This means lenders are more likely to give you a loan, credit card, or car finance.

While your credit score is a good starting point, lenders look at more than just that number. However, it's still a helpful tool to understand your overall financial health. 

Who Keeps Track Of Your Credit Score?

In the UK, there are three main companies (credit reference agencies) that keep track of your credit score: 

• Experian.
• Equifax.

• TransUnion.

Your Credit Score May Be Different Depending On Which Company You Check It With

It's normal for your credit score to be a little different when you check it with different credit reference agencies. Each company has its own way of calculating scores and might have different information about you. So, don't worry if your score isn't exactly the same everywhere.

What Is A 'Good' Credit Score?

A good credit score generally means you’re seen as a low-risk borrower. For most UK agencies, that’s roughly 881+ with Experian, 671+ with Equifax, or 604+ with TransUnion. A higher score can mean better interest rates, easier approvals, and more credit options.

What Is A Bad Credit Score?

A bad credit score is usually below 580. This means you've probably had problems with credit in the past. This doesn't mean that you won't be accepted for credit. However, you may pay higher interest rates.

Lenders like to see high credit scores because it means you're more likely to pay back your loan. 

Even if your credit score isn't perfect, you might still be able to get a loan. Things like moving a lot, not having any loans before, or having a lot of available credit can bring your score down. But don't worry, there are things you can do to improve it. 

It's normal for your credit score to be a little different when you check it with different credit reference agencies. Each company has its own way of calculating scores and might have different information about you. So, don't worry if your score isn't exactly the same everywhere.

Why Your Credit Score Matters for Car Finance

Summary: Your credit score influences the APR, deposit required, loan amount, and approval odds. A higher score usually means a lower rate and more choice. A lower score may mean a higher APR or a larger deposit.

Eligibility And Approval Odds

Your credit score directly affects your chances of being approved for car finance.

• High scores (usually “good” or “excellent”) make you more likely to be approved, often with fewer conditions attached.
• Lower scores don’t automatically mean a “no,” but lenders may look more closely at your income, existing debts, and payment history.
• Some lenders, like non-prime or specialist finance providers, focus on helping people with fair or poor credit get approved — sometimes at higher interest rates. Visit our bad credit page to learn more.

If your credit score is low, improving affordability (like reducing debt or adding a deposit) can help strengthen your application.

Quick summary: A good or excellent credit score increases your approval odds for car finance, but even lower scores can be accepted by specialist lenders who assess affordability more flexibly.

Pricing Impact And APR Bands

Your credit score doesn’t just influence whether you’re approved — it also affects how much you’ll pay for your car loan.
Lenders use what’s called risk-based pricing. That means people with higher scores are offered lower Annual Percentage Rates (APRs), while those with lower scores pay more to offset perceived risk. We’ve explained this below.

Tip: Improving your credit score before applying can make a big difference to what you pay each month. Even moving from “fair” to “good” could save hundreds over the life of a loan.

Quick summary: The higher your credit score, the lower your likely APR. Lenders price car finance based on risk, so improving your score can directly reduce your monthly costs.

Can You Get Car Finance With A Poor Credit Score?

Summary: Yes, but you may pay more. Improving affordability, offering a deposit, and showing stable income can help you qualify.

A higher deposit can help if your credit score isn't great. It shows lenders that you're serious about buying the car and that you've saved some money. This can make them more likely to give you a loan.

Improving Your Credit Score 

If your credit score isn't as good as you'd like, don't worry. Here are some things you can do to make it better:

• Paying bills on time improves your credit score. It shows lenders you're responsible and helps to build your credit score.

• Keep your credit card balances low. Try to spend less than 30% of your credit limit; this shows lenders that you use credit responsibly. High credit utilisation reduces your credit score.

• Have a good credit history. Use your credit cards and pay them back on time every month.

• Check your credit report. Checking your credit report helps identify mistakes or fraud.

• Don't apply for too much credit at once. Avoiding multiple credit applications protects your score from temporary dips.