After weeks of trawling different van websites, endless chats to salesmen, and more “van spam” than you can shake a stick at, you’ve now probably got a good idea of the van deal you’re after and how much it’s going to set you back – don’t let your bad credit history stop you from taking the next step.
Read on to understand more about how finance companies make their decisions and discover different ways to improve your chances of securing the finance your new company needs to get your business on the road and your credit where it should be.
Universal Credit Rating?
Just like applying for a new credit card or loan, finance companies will look at your credit history before deciding to offer you finance. But before you panic, it is important to realise that there is no such thing as a “universal credit rating”. There are hundreds of different finance companies, each with their own check list. This means that if you have been unlucky enough to be turned down by one company, it is not necessarily the case that you won’t be accepted by another.
What Might Affect My Credit Score?
Are you guilty of making lots of late payments? Have you ever been declared bankrupt, received a County Court Judgement (CCJ) or entered into an Individual Voluntary Arrangement (IVA)? Or, ironically at the other end of the scale, have you never taken out a loan before? All of the above may negatively impact on your credit file.
Bad credit does not automatically mean that you will not be able to get the finance deal you are looking for however. Finance companies use a score system and look at many different things before reaching a final decision. Finance companies will even look into fraud data (whether you have committed a fraudulent act or if someone has stolen your identity and committed fraud)!
It is also crucial to realise that finance companies do not base their decision solely on your credit score. Your past businesses, your ability to make regular payments and other debts are all things which are taken into consideration. Rest assured, there are several things you can still do to improve your chances of securing your new van.
How To Improve My Chances Of Getting Finance
A better Credit Rating will not only increase your chances of getting finance, it will get you a lower interest rate and even mean that you need to put down a smaller deposit on your new vehicle – leaving you with more money to buy the things you need to set up your new business.
1. The most obvious (and for many the most difficult option) is to increase the size of the deposit you put down. The larger the deposit you can scrape together, the less risk you pose.
2. Make sure you are on the electoral register as credit rating agencies check the electoral roll. It is also worth noting that frequent changes of address trigger alarm bells amongst finance companies.
3. If you are a new business, taking out a credit card and paying off any debts regularly might work to your advantage as this will show the finance company you are a reliable lender. In doing so this will help to build up a positive credit history. Worth a note – If you are the sort of person to forget a payment date, set up a direct debit to put a stop to any late payments.
4. Avoid using your credit card to withdraw cash. This will go against you- lenders view this as poor money management. Moreover, even if you pay off the withdrawal in full at the end of the month, it will more than likely still cost you as most banks charge for this facility.
5.Lastly, if your application has been turned down, avoid requesting multiple credit applications in a short space of time as this can adversely affect your rating.
Finally, if you do have an unresolved complaint about your credit record, you can contact the Financial Services Ombudsman at the address below.
Financial Ombudsman Service,
Well, we hope that this has been a useful read for you and that you are now well on your way to getting the credit you need to finance your shiny new van! All that’s left to do is check that you have the best deal. For that, take a look at our huge range of low cost business lease deals from just £112 for the Fiat Fiorino or from £204 for the Ford Transit Custom. Give the Rapid Vans Team a call, we are more than happy to give you some friendly advice. Give us a call on 01446 502 955 today.