Finance plays a vital role in new car sales - the focus on credit information increases

New figures released earlier this month by the Finance & Leasing Association (FLA)* showed a 22% growth in point-of-sale consumer new car finance volumes in December, and 10% growth in 2015 as a whole.  With finance playing such a vital role for new car buyers, Equifax is highlighting the role of credit information in the process. 

“With more than 80% of new car registrations now backed by some sort of finance package, according to the FLA, it’s important for budding car buyers to understand the role their credit information can play in their process”, explained Lisa Hardstaff, credit file expert at Equifax.

“Car finance companies will assess a range of information about an individual, as part of a new car loan application. In addition to the information provided on an application form, lenders perform a credit check to get an overall picture of an individual’s credit history. They will want to see that the applicant stays up-to-date on repayments on past and current agreements, as well as assessing the level of financial commitments they already have.

“We would suggest, therefore, that the first step for anyone planning to make the most of the low interest rates and competitive manufacturer deals on new car finance, is to obtain a copy of their credit report.

This way, they can see the different types of information a lender will use as part of the application process.  It is always a good idea to know in advance what information is held on your credit report, so if there are any actions you can take to help improve your credit score you have given yourself time for it to show in your credit report.

“For example, consumers should always make sure they are on the electoral roll, as this allows lenders to verify their identity on an application.  If they are not on the electoral roll it can take up to 3 months for it to appear on their credit report, depending on when they sign up and when their local council updates the credit reference agencies. Looking at your credit report 3 – 6 months in advance can help avoid any delays in the loan being approved, as well as helping to ensure that they gain access to the best credit deals for their financial situation. Our credit report check list can help car buyers can avoid disappointment.”

The Equifax Credit Information Check List

  1. Check your credit report
    Apply for a copy of your credit report as much as 6 months before you start making new applications for credit. This will allow you to review your report to ensure it is accurate and up-to-date.
  2. Do you have a credit history?
    Lenders typically look at your credit history when making a decision on your application. If you already have a history of meeting your financial obligations, including repaying credit cards, loans or credit accounts and service contracts, lenders can use this to decide whether to approve your application. If you don’t have much credit history you could consider taking out small amounts of credit in order to demonstrate your ability to responsibly manage credit and repay debts. If you decide to do this, ensure the full balance is paid off each month to avoid being charged interest.
  3. Are you registered?
    The electoral roll is used by many companies for identity verification purposes in order to combat identity fraud. It is important, therefore, that you are registered on the electoral roll at your current address.
  4. Correcting errors
    If there’s a mistake on your credit report and it is in relation to a specific account, contact the lender or service company it relates to and ask for the error to be corrected. If you’re unsure which company to contact, you can contact the credit reference agency concerned and they can raise this with the lender or Service Company on your behalf. In most cases the correction will appear on your credit report within 28 days.
  5. The right to explain
    You can also add a ‘notice of correction’ to explain any items on your report, such as missed payments, which may have occurred due to life changes, such as losing your job. The ‘notice of correction’ will only be recorded with the Credit Reference Agency (CRA) you provide it to and will stay on your credit file indefinitely. The lender will see it when considering an application.
  6. Individual Voluntary Arrangement (IVA) and County Court Judgments (CCJ)
    If you are declared bankrupt or take out an IVA, it could impact your ability to gain access to credit during that period. If you’ve had a County Court Judgment and it is now settled make sure the settlement is recorded on your credit file. If not contact the court to get confirmation details and inform the credit reference agencies.  Both these events will stay on your credit report for six years.
  7. Managing existing credit agreements?
    Try to pay more than just the monthly minimum on credit agreements and where possible keep credit balances low. Settle debts, such as personal loans or hire purchase agreements in full. This demonstrates your ability to repay debts. Missed payments may make lenders think you’re already struggling with debt.
  8. Have you got cards you’re not using?
    Lenders will often look at the total amount of unutilised credit available to an individual and consider this when making a lending decision.
  9. Don’t apply for credit too regularly?
    Avoid multiple applications in a short space of time. Each credit application logs a search on your credit file. Too many could appear as if you already have too many commitments.

Avoid multiple applications in a short space of time. Each credit application logs a search on your credit file. Too many could appear as if you already have too many commitments.

The Equifax Credit Report is accessible for 30 days free simply by logging onto www.equifax.co.uk/Products/credit/credit-report. If customers do not cancel before the end of the 30 Day Free Trial, the service will continue at £9.95 per month, giving them unlimited online access to their credit information and weekly alerts on any changes to their credit file. It also includes an online dispute facility to help them correct any errors on their credit file simply and quickly.

END

*http://www.fla.org.uk/index.php/2015-sees-strong-growth-in-consumer-car-finance/#

 

For further press information, please contact: Clare Watson, Cecile Stearn, Parm Heer or Wendy Harrison at HSL on 020 8977 9132 / Fax: 020 8977 5200 or Email: equifaxbtocteam@harrisonsadler.com

About Equifax

Equifax is a global leader in consumer, commercial and workforce information solutions that provide businesses of all sizes and consumers with insight and information they can trust. Equifax organizes and assimilates data on more than 600 million consumers and 81 million businesses worldwide.  The company’s significant investments in differentiated data, its expertise in advanced analytics to explore and develop new multi-source data solutions, and its leading-edge proprietary technology enable it to create and deliver unparalleled customized insights that enrich both the performance of businesses and the lives of consumers.

Headquartered in Atlanta, Equifax operates or has investments in 19 countries and is a member of Standard & Poor's (S&P) 500® Index.  Its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. In 2013, Equifax was named a Bloomberg BusinessWeek Top 50 company, was #3 in Fortune's Most Admired list in its category, and was named to InfoWeek 500 as well as the FinTech 100. For more information, please visit www.equifax.com.

Equifax Limited is authorised and regulated by the Financial Conduct Authority.

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