Using finance to buy a car or pay for repairs and upgrades can help to grow your credit score. 

While timely repayments can get your numbers moving in the right direction, there are some potential bumps in the road you’ll want to steer clear of.  

With that in mind, it’s important to understand the ways that car-related finance could impact your credit health and how to keep an eye on your progress. Let’s shine a light on the details.  

Keeping your credit in the fast lane 

To stay on top of your credit health, it's beneficial to regularly monitor your credit score and the information on your credit report. We recommend using Checkmyfile, the most detailed credit report you can get. They pull your data from the UK’s three main credit reference agencies – Experian, Equifax, and TransUnion – in one place, so you know where you stand. 

Know your numbers: Get a free 30-day trial with Checkmyfile and see how your repayments are affecting your credit score. It’s then £14.99 a month, and you can cancel online anytime. 

A green light for your financial future  

Taking out finance, like your interest-free Bumper plan, and managing it responsibly can improve your credit score. Here's how: 

Payment history: Your payment history has a big contribution towards your credit score. By making finance payments on time each month, you're building a positive payment record, which shows lenders you’re reliable. 

Credit mix: Having different types of credit (such as car finance, credit cards, or a mortgage) can positively affect your credit score. Adding car finance to your credit mix can show lenders that you can handle various types of credit responsibly. 

Long-term credit relationship: As you continue to make payments over the life of your finance agreement, you're establishing a long-term credit relationship. This can be viewed favourably by lenders and credit reference agencies. 

What happens if you miss a payment?

While timely payments can boost your score, late payments will have the opposite effect: 

Negative entries: Payments made later than 7 days may be reported to credit reference agencies leaving a negative marker that can last for six years. 

Lower credit score: Late payments can cause a drop in your credit score, which can make it harder to be accepted for credit going forwards.  

Higher interest rates: When you next apply for credit, lenders may offer you higher interest rates because they view you as a higher risk. 

The road ahead 

By keeping an eye on your credit score and staying on top of your repayments, you're not just maintaining your vehicle – you're also getting your credit health in gear for a brighter future. So don’t forget to monitor your credit health with Checkmyfile. 

Remember, your credit score reflects your credit health. By managing your car finance well, you're paving the way for better credit opportunities down the road.