For many Australians, the prospect of getting a car loan can stir up both excitement and nervousness. While choosing the perfect car feels like a step toward freedom, the concern over whether you’ll get approved for the loan and the amount you need can overshadow that excitement. A key factor that can make or break your application is your credit score.
Whether you’ve been declined before or are just unsure where your credit score stands, we understand the anxiety you may be feeling and are here to help you understand your credit score, so that you can be confident you’ll get approved first-time and don’t miss out on your dream car!
The worries and anxiety about your credit score can feel like a roadblock standing between you and the car you’ve been dreaming about. You don’t want to miss out on that perfect vehicle because you’re uncertain about your credit score. The fear of being denied a loan can stop you from taking the next step. “What if my application is denied? What if my credit score isn’t good enough?” These are looming questions for many people we speak to.
It’s important to remember that despite these concerns you can take action, even if you have no idea where your credit currently sits, it’s never too late or too early to build your score.
Improving your credit score and working to improve your credit report isn’t complicated, but it does require consistency, discipline, and noticeable focus. There are some very simple things you can do to help ensure your credit score stays in the best possible shape so that you never have to have those anxious and unsure feelings again, by following the simple steps outlined in this blog, you can begin building a stronger credit profile that puts you in a better position for first-time loan approval, as well as access to the best deals on the market.
Your credit report allows lenders at a glance to understand the potential risk of someone falling behind in their loan payments. It is a detailed account of you and your borrowing history, including personal details like date of birth and address as well as enquiries for finance, past and active credit facilities, and records of your payment history.
As the document can contain a sizeable amount of information and is used in every credit assessment, it is important that you check your file regularly to ensure all data reported is correct & accurate. Mistakes can happen when it comes to reporting from financial providers, and these mistakes can impact your file and score if left uncorrected.
Equifax provides one free credit check every 3 months, which will allow you to keep up to date with your file and spot any irregularities so that your score and file can remain strong and free of errors.
Your credit file details your payment history on your loans and financial commitments and shows for each month over the last 24 months if you have paid that commitment on time or have been behind. This type of reporting is called positive reporting and is a key factor taken into consideration by lenders, as well as a major factor in determining your credit score. A history of on-time payments shows lenders that you’re reliable and responsible and results in a higher score.
Whether it’s utilities, credit card payments, car loans, personal loans, or a mortgage, staying on top of your bills and financial commitments is one of the most effective ways to improve your credit report and protect your credit score.
Every time you apply for new credit, it triggers a hard enquiry on your report, which can lower your score. This enquiry appears on your file whether you are approved or declined and whether you decide to take the offer the lender provides or not. It is important to remember that when you are putting your details in online to see what options are out there, quite often, this can also involve a hard enquiry on your credit file and, as a result, lower your score. One of the quickest ways to diminish your credit score is through multiple applications in quick succession.
To minimise the chances of enquiries impacting your score negatively, avoid applying for or opening new credit facilities in the months leading up to your car loan application. When you are ready to apply it’s important to reach out to a broker like us so that we can put together all the options for you without impacting your credit score, and ensure you get approved the first time.
When looking at how to protect & grow your score, minimising credit enquiry isn’t enough on its own. Your credit score will not stay where it is by simply not making enquiries, you need current credit reported on your file before the score can grow. Active facilities paid well show lenders that you have a substantiated history of meeting your financial obligations, which makes you a lower perceived risk to lend to and as a result, greatly improves your score.
If you have little to no credit history don’t stress, an easy way a lot of people start building their credit history is by making one formal enquiry for a small, manageable credit obligation like a low-limit credit card or small car loan, and ensuring they maintain perfect payment history on the facility. Establishing a solid credit history takes time, but it’s never too late or early to start!
Your credit utilisation ratio plays a part in your score, as does the types of credit you are applying for. If you have lots of enquiries and active facilities for credit cards and personal loans, lenders may view this as a sign of reliance on credit which results in a lower credit score due to your credit enquiry patterns. Whereas a small number of enquiries and open facilities for a car loan and a mortgage will be viewed and scored differently on your file as these aren’t generally signs of credit reliance.
Regularly checking your credit score helps you keep track of improvements and catch any issues early before they make an impact. You can also use credit monitoring services to stay informed about changes to your score and report, including live updates when someone accesses your credit file and makes an enquiry.
As part of our service to our customers, we also provide a free copy of their credit file that we can talk through so that they are up to date with and understand all the finer details on their file.
You have the power to improve your credit score, and it’s never too late or too early to start. It may take some time and patience, but by following these steps, you’ll be on the right track toward growing your score and securing first-time loan approval! If you’re ready to get your pre-approval moving, click here to get the ball rolling and start your application.
At Fox Finance Group, our role is to support you every step of the way. We understand that the car loan approval process can feel daunting, and we’re here to simplify it for you. Whether your credit score is in great shape or needs a little work, we’ll help you navigate the journey.
With the right support, you can feel confident that your credit score won’t stand in the way of getting approved for the car you’ve always dreamed of driving. Check out our customer reviews to see how we’ve helped others just like you.
It’s easy to ignore your credit score, especially if it feels like an abstract number that doesn’t affect your day-to-day life. But ignoring it can come with unwanted consequences when it’s time to apply for a car loan. The good news is your credit score doesn’t have to stop you from getting approved for a car loan.
By working with Fox Finance Group, you can take control of your credit situation and feel confident about your loan application. Our highly knowledgeable team can take the guesswork out of the application process and ensure you have all the information you need to make informed decisions about your car finance.
If you’re ready to get the wheels moving apply today and take advantage of our free pre-approval process, which costs and commits you to nothing, so that we can tell you exactly what options are out there. We’ve helped countless Australians get approved for new car loans, and we’re ready to do the same for you. Start your journey with us by visiting our car loans page today.
 Nathan Drew |
Nathan joined Fox Finance Group in 2018 to help drive the strategic growth of the business and also help build on the solid foundations that have held strong in the business since 2006.
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