✔️ You can get a car on subscription even if you have 'bad' credit.
✔️ Most subscription services carry out a 'soft' credit search which doesn't affect your credit score or history.
✔️ Onto is currently the only subscription service in the UK which doesn't run any credit searches (though you will still need to pass an affordability check).
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.
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.
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.
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:
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:
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.
Full list of negative factors which may lead to bad credit:
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.
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.
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.
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.
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.
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.
Here's a breakdown of the subscription services currently available in the UK and the type of credit search they carry out:
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:
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. ”
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