Credit checks and your car subscription

Credit checks and your car subscription

We explain what credit checks are and which car subscription services in the UK carry them out.
11 min read
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Before taking out any form of credit, you’ll need to provide information (and usually documents) to prove your creditworthiness.

For example, other forms of credit, such as credit cards and loans, that information is used by lenders to assess risk and prove your identity.

Car subscriptions services would often carry out similar credit check to make sure you can afford your monthly payments and  to see if you have any negative history recorded on your credit file.

Do car subscriptions do credit checks?

Yes – subscription companies want to see if you can afford your monthly payments by assessing your past credit history.

When applying to get a car on subscription most car providers would carry out a ‘soft’ credit check. This type of check doesn’t leave a mark on your credit report and doesn’t negatively impact your credit score. It’s often used to prove your identity and check your past credit history.

Other subscription companies may run a ‘hard’ check when getting an all-inclusive car subscription which does leave a mark and can reduce your credit score. This type of search reveals your full credit past, including payment history, open and closed accounts, CCJs (county court judgements) etc.

Car subscription, no credit check: does it exist?

Yes! But you'll have to pass affordability checks which may include a soft credit search on your report. Onto until recently didn't carry out any credit checks but that's no longer the case. Read more about Onto in our guide and find the car for you. They specialise in electric cars so the car inventory isn’t as rich as with other providers.

Flexed is a good option for those with bad or no credit history. They underwrite their own contracts, so they’re more willing to consider drivers with limited credit history than other car subscription providers.

What is a credit score?

Your credit score is a numerical rating based on your financial history. The score range depends on the credit agency. The good credit score usually showcases that you have a good payment history and present lower risk to lenders. This also usually means you’ll get better deals and rates.

All credit reference agencies in the UK let users check their scores for free. Here’s what a good credit score looks like with each one:

Equifax Experian TransUnion
Fair 439 to 530 721 to 880 566 to 603
Good 531 to 670 881 to 960 604 to 627
Excellent 811 to 1000 961 to 999 628 to 710

What credit score is needed to get a car on subscription?

Car subscription providers don’t usually look at your score but rather how well you have managed your financial accounts in the past. The credit score is more for you to gauge your financial wellbeing.

Also, the cost of the monthly car subscription is usually fixed and doesn't depend on your score, so you won’t benefit from better deals even if you have an ‘excellent’ score.

You may be asked to provide the following documents and information when getting a car on subscription:

  • A scanned copy of your UK driving license.
  • Information on past driving convictions.
  • Confirm whether you have been disqualified from driving in the last five years.
  • Utility bill dated within the last three months.
  • Employment details.

Car subscription with ‘bad credit’

If you have bad credit history or score, chances are you’ve had issues repaying credit in the past. Sometimes it takes time to ‘repair’ your credit and increase your score.

Young people with no credit history or people who’ve never opened any accounts in the UK would also fall into that category, simply because lenders cannot asses risk and your ability to make payments on time.

So if you don’t want to get a car with bad credit there’s a couple of things you need to keep in mind.

  • Monthly affordability - It will very be important to work out what you can comfortably afford to repay each month. Then compare subscriptions cars from different companies to find one that best one that fits your financial ability and needs.
  • Stay away from adding more debt – If you’re already in a difficult position, try to avoid getting more credit which may put more burden on your monthly affordability.
  • In trouble? Speak to your provider – Car subscription companies are usually quite flexible so you may be able to cancel early and return the car before your financial situation worsens.

Full list of negative factors which may lead to bad credit:

  • Late payments - Missing one payment may not decrease your score drastically, however it may be a dealbreaker for some lenders. Being consistently late and continually missing payments can lead to a default.
  • Defaults - If you miss too many payments, a creditor will provide you with a default notice asking you to keep up with payments. If you don't, they will then close the credit account and the lender may sell your debt to a debt collector or take you to court.
  • County Court Judgements (CCJ) - Lenders are able to apply for a CCJ against you if you aren't repaying your credit. If the court rules in favour of the creditor, you'll be issued a judgement and ask you to repay what you owe. If you ignore this, the court has the right to take your belongings as a way to cover your debt.
  • Debt repayment plans - Debt Relief Orders (DROs), Debt Management Plans (DMPs) and Individual Voluntary Arrangements (IVAs) appear in your credit report and can influence lenders' decision making.
  • Bankruptcy - Bankruptcy is a legal status for people unable to repay money they owe. It's generally known to be a last resort option for people with debts worth over £5,000.
  • Hard searches - Some lenders, including some car subscription companies, may run a hard search which impacts your credit score. Normally the impact of these clears in 3-6 months so you should avoid applying for credit too often.

All of these factors can stay on your credit report for up to six years. This means your ability to take credit will be negatively impacted for a very long time.

Can you get refused when applying for a subscription?

You probably won’t be refused a car on subscription because of poor credit history per say but rather if the lender cannot match your details and prove your identity.

Maybe in the future subscription services will start using credit history to offer better deals, but right now, chances to get refused are low.

Do car subscriptions go on credit report?

Cars on subscription do not appear in your credit report.  

Cars bought on finance (PCP or HP) will always always show up in your credit history. Even cars on lease are also reported to credit bureaus, such as Equifax, TransUnion and Experian.

Your report will also show the amount left to pay, the number of months remaining and any missed payments.

Car subscriptions also don't directly build your credit score. However, services like Experian Boost look at your monthly subscriptions (such as Spotify and Netflix) which can actually improve your Experian credit score.

Will a car subscription hurt my credit score?

Most providers would carry out a ‘soft’ search which doesn't put a dent in your credit score. Others, like Wagonex, run a ‘hard’ search which will negatively impact your score. Be careful not to do many applications in a short space of time as that will keep reducing your score.  

Does my credit score affect the cost of cars on subscription?

No, it doesn’t. The monthly cost is usually fixed so even if you have the highest score possible, you won’t benefit from cheaper subscription cost.

Would cancelling my subscription affect my credit score?

No, cancelling a subscription and returning the car will not hurt your credit score. Even swapping cars every few month isn’t going to be an issue (it’s even encourage by some companies).

Usually, once you’ve created an account with a subscription company and they have your details on file, they won’t carry out any credit checks again.

Which UK car subscription companies require a credit check?

Here's a breakdown of the subscription services currently available in the UK and the type of credit search they carry out:

Provider 'Soft' check 'Hard' search
Wagonex No ❌ Yes ✅
Onto Yes ✅ No ❌
My Car Direct No ❌ Yes ✅
Flexed No ❌ Yes ✅
Care by Volvo Yes ✅ No ❌
Evogo Yes ✅ No ❌
Pivotal Yes ✅ No ❌
elmo Yes ✅ No ❌
Sixt+ Yes ✅ No ❌

Getting help with your debt

If you're worried about your debts, you can get help from the government and other charity organisations. They will help you track down debt, understand what to pay back first and help you make better financial decisions in the future.

You can seek help from the following organisations:

Coronavirus pandemic impact on credit and affordability

In March 2020, the pandemic hit many people negatively which resulted in record job losses and business closures. However, now we can see a more positive outlook thanks to a research study carried out by Experian in September 2021.

Customers with a poor credit scores were 49% more likely to see a credit card that they were pre-approved for in August 2021, compared to January 20211, and 32% more likely to see a loan that they were pre-approved for. Those with a very bad credit score were 94% more likely to see a pre-approved credit card offer and 18% more likely to see a pre-approved loan offer over the same period.

Sebastian Worbs, MD Products at Experian Consumer Services said:

"Eligibility ratings give people an indication of their chances of being approved for a specific credit deal. As lenders continue to bring competitive products to market consumers have a better chance of being pre-approved for a product that meets their needs. People looking for credit should regularly check their credit score and use comparison services to shop around until they find the one that’s going to work best for them. ”

Browse all cars available on subscription

There are hundreds of cars available via UK subscription companies.

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