We hope that this guide might help you if you’re new to credit. It’s just our take on things, so please bear in mind that there will always be exceptions. Just like with everything in life!
Sole Traders & Partnerships
Finance companies can often make automated decisions here. They will have a point-scoring system, and each company has their own considerations. Most people have heard of Experian for credit checking.
In an Experian credit check, the following things are assessed:
- Whether you’ve ever had any missed credit payments even if for something small and silly
- If you have any CCJs (County Court judgments) or Adverse credit history (e.g., if you have an outstanding gas bill from three years ago)
- If you’re on the electoral roll. If not, you can register here.
- If you’re traceable. Sometimes people have multiple addresses, particularly after a divorce. However, they can trace you from a bank statement sent to your parents’ house!
- Finance companies often require a valid driving licence registered to your current address. (On this note, please be sure to tell us the address on your licence.)
- Many banks use their own credit-checking service instead of Experian. It’s possible that even if your Experian score isn’t perfect, you might still get finance through our bank-related funders.
A Limited Company’s credit score is checked by a Delphi score; this is the Experian rating for companies. However, a very new company won’t have a credit score. The assessment for a Delphi score is more or less the same as for an Experian rating: payments history, CCJs, etc., are all examined.
Net Worth On Companies House
This is perhaps the main consideration. Your company’s net worth is public information, and if it has high net worth, obtaining credit will be easier. The opposite is also true. Generally, you can borrow up to 25% of your company’s net worth. If you’ve already used that to buy another vehicle previously though, it may be harder.
Credit checkers will also look at the company’s directors. If any of the directors have a “colourful” history, lenders will often say no. This might involve, for example, starting and then closing down lots of companies.
- An established business
A company with 10 years of accounts and a great Delphi score. In theory, there should be no trouble getting finance as long as the company hasn’t over-borrowed on other loans.
- A younger company
A company that’s three years old with three sets of accounts and a net worth of £50,000: this is a borderlinepass. Often, much will depend on the financial strength of the director(s). Lenders will frequently ask for a personal guarantee.
- A new company
A company that’s maybe 14 months old. There aren’t really any accounts to speak of, so there’s no verifiable net worth. Especially if there’s no previous sole trader company, it’s unlikely that the company will get credit without a guarantor.
You Can Always Try
The only sure-fire way to know whether or not you’re eligible for finance is to try. Give us a ring, have a chat, and we’ll do our best to advise you. We help people find the best deals for their circumstances every day, so we may well be able to help you too.
Hopefully this guide has cleared things up a little, but if not, or if you have any questions, we’re always at the other end of the phone line. Well, almost always: we do sleep sometimes!