If, like many people, you’re looking at bad car finance deals for people with low credit ratings, then you may well have been experiencing the feeling of having a big red label stamped on your forehead. It can sometimes seem that having even minor issues registered against you on your credit history sees you labelled as unsuitable for car finance, car loans or other financial packages to help you buy a car.

The trouble is that for many people the problems on their credit history don’t relate to the current situation. For example, Kevin was working as a mechanic at a garage for seven years before the company suddenly went bankrupt. The owner didn’t tell him until the day the garage closed, leaving Kevin with bills to pay, mortgage payments to make and a family to support.

Kevin had a few savings, and used these to help keep the wolf from the door, but only just. His savings couldn’t stretch to fulfilling his usual monthly outgoings, especially as he had no idea how long he would have to support himself that way.

Fortunately after four months he was back working at a garage nearby, and was able to start making payments as normal again. But for the four months he was unemployed he was unable to meet the regular payments on his credit cards, and he was only able to pay a proportion of his usual mortgage payments.

A few months later and the unfortunate period was largely forgotten, until he went to the bank for a car loan. He was declined on the basis of his credit rating, even though he’d been banking with them for years and had never had any problems. The trouble was that his fairly recent credit history showed missed payments and late payments, with no explanation or justification apparent.

The same happened when he went to a car dealer to buy a car with a car finance package. He was again declined, based on his credit rating.

If you’re in a similar situation, and have a poor credit rating which isn’t your fault and is history anyway, what are your options? It’s easy to feel that your credit history is a millstone you have to carry around with you, and that it will never go away, declaring loudly to any finance company that you are to be avoided.

In fact you have several options, and it’s worth considering them before resigning yourself to having to walk everywhere, or paying absurd interest rates to loan sharks.

The first thing to be aware of is that you don’t have one single credit history. In the UK there are actually three credit agencies, and most car finance companies will only do a credit search using one of these. In many cases you’ll find that your credit commitments are registered with only one or two of these agencies, so that the complete picture isn’t always apparent.

This means that if you have been declined by one car loan company, you may find that the next one accepts you simply because they’ve done a credit check on you using a different agency, and that your credit rating with that agency is slightly better. For more information on what each agency has on file about you, you can apply to receive a copy of your statuary credit report from each one.

The next thing to do is to request that any entries on your credit file which are negative in any way are appended with a note you can write yourself. This gives you the chance to offer an explanation for the negative entries, helping to put them in context. Any car finance firm which does a credit check will have to process this manually if there are any notes on your file, and this can often help improve your chances.

Thirdly, the easiest and quickest way is to consider going to a company that offers guaranteed car finance. These companies don’t worry about what’s on your credit history because they’re more concerned with your current financial circumstances. Guaranteed car finance schemes use the car as capital, and the good news is that not only do such schemes give you the chance to buy the car you want, but as long as you keep up the repayments the positive entries made each month on your credit file will help considerably towards improving your credit rating.

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