Credit score hacks: 7 ways business owners can secure better car financing deals

Financing a car as a business owner can be tricky, especially if your credit score isn’t as high as it could be. But did you know that a few strategic steps can significantly improve your creditworthiness and help you secure better car financing deals? Here are practical tips that make a real difference, so you can get that vehicle for your business on more favourable terms.

Review and correct your credit report

Start by requesting your credit report from reputable credit reference agencies. Errors can creep in, potentially lowering your score and hurting your financing prospects. Look carefully for discrepancies in your credit history, incorrect addresses, or missed payments you’ve actually made. Rectifying these mistakes can instantly improve your score, giving you a stronger foundation to secure a competitive financing offer.

Reduce your credit utilisation

One of the most influential aspects of your credit score is your credit utilisation rate. This refers to the percentage of your available credit that you’re actually using. Lenders typically see high utilisation as a red flag, suggesting you might be over-reliant on credit. Aim to keep your credit usage below 30% – ideally lower. Paying down some debt or increasing your credit limit (if manageable) can bring this rate down, boosting your credit score and helping you access better car loans.

Pay off small debts and reduce outstanding balances

Outstanding debts not only reduce your credit score but also indicate to lenders that you may be stretched financially. Prioritise paying off small debts where possible. Even small reductions can positively impact your credit rating and demonstrate to lenders that you’re actively managing your debt. Lowering your balances can also free up some room in your credit utilisation rate, which can further improve your creditworthiness.

Build a strong payment history

Late payments can linger on your credit record for years, impacting your chances of a favourable financing deal. Consider setting up automatic payments or reminders to ensure you’re consistently meeting payment deadlines. Establishing a track record of timely payments can gradually improve your credit score, reflecting positively when lenders assess your application.

Avoid multiple credit applications at once

Each time you apply for credit, it leaves a mark on your credit report, and too many applications in a short period can suggest financial instability. Limit your credit applications to reduce these marks, especially when you’re preparing for a significant application like car financing. Additionally, consider using soft searches, which don’t impact your credit score, to gauge your chances of approval before making formal applications.

Separate personal and business finances

Separating personal and business finances isn’t just a good financial habit; it can also influence your credit profile. By keeping your business credit utilisation low and showing a responsible approach to your company’s finances, you build a stronger business credit history. This separation can make your business appear more stable and reliable in the eyes of lenders, potentially improving your car loan terms.

Get a credit-builder account or card

If you’re finding it challenging to improve your score, a credit-builder account or card might help. These financial tools allow you to make regular payments, which positively impact your credit history over time. Many business owners have successfully boosted their credit score by consistently managing credit-builder products, positioning them for better financing options.

Reaching the road to better deals

By refining your credit score, you’re not only making yourself a more attractive prospect to lenders but also opening doors to better car financing opportunities. A stronger credit profile can lead to more favourable terms, lower interest rates, and ultimately, a more manageable financial commitment. So, start small, stay consistent, and you’ll find yourself driving a great deal in no time.