Last updated November 1st, 2023
Car finance can positively impact your credit score if you pay the instalments on time. In addition to this, car finance can improve your credit mix. However, your credit can be negatively impacted by car finance if you miss a payment, default on the loan - or can’t afford the loan.
In this guide, we will cover how car finance can impact your credit score, how quickly you can expect to see your score improve after financing a car – and the other factors which can affect your credit score.
Utilising a form of car finance, such as personal contract purchase (PCP), hire purchase (HP), or personal contract hire (PCH) can help you build your credit score providing you make the repayments in a timely manner.
In addition to this, car finance repayments can improve your credit mix as lenders value seeing revolving credits. (This shows that you have trustworthy credit.)
To check whether a car finance plan will suit your personal budget, try our free car finance calculator.
Unfortunately, there is no set timeframe for how long it will take to see your credit score improve after financing a car. However, once you start making timely repayments, you should start to see improvements.
There are numerous factors other than car finance that can affect your credit score.
The following factors may improve your credit score:
The following factors may negatively affect your credit score: