Whatever your financial situation, one thing that will follow you everywhere is your credit history. Your credit history is made up of your past borrowing and repayment behaviour, including for your credit cards, rent or mortgage payments, loans and utility bills.

When you come to finance or lease a car or get a loan, lenders will look at your credit history to see whether you are a low or high-risk customer. A bad credit history may lead lenders to reject your application.

However, what happens if you do not have a credit history? In this blog, we will cover the challenges of having no credit score and how rent-to-own can help you finance a car.

Why a Blank Credit Slate Can Be a Barrier to Finance

If you have avoided using credit, taking out loans or financing big purchases, you may have avoided building up a credit history. If so, you might think that having a ‘blank slate’ financially is an advantage.

Unfortunately, nothing could be further from the truth. In fact, lenders consider those who have no credit history as risky. This is because they rely on past financial behaviour to predict future repayment capacity, which is not available for those with no credit history. Consequently, those with an unknown level of risk are lumped in with those who have a poor credit history.

This can make it much harder to get approved for car loans, mortgages, credit cards or mobile phones. Additionally, if a lender decides to offer credit, you may find it comes with higher interest rates, lower credit limits or fees to compensate for the higher risk factor.

Proof of Income: The Key to Approval With no Credit History

So, if you have no credit history, what can you do to prove to a lender that you are financially responsible?

The answer is simple: individuals with no credit history can provide strong, documented proof of income. This shows that you are financially stable and have the capacity to make repayments.

First-Time Car Buyers: Understanding the RTO Contract

If you have no credit history, rent-to-own can offer a means through which you can own a car. Rent-to-own is flexible and all-inclusive, with low requirements. It requires weekly payments for a set period of up to five years, with ownership of the car at the end of the rent-to-own vehicle contract. These contracts usually include maintenance, registration and insurance. However, you risk repossession if payments are missed.

Securing Your RTO With Employment and Residency Proof

To prove your eligibility for a rent-to-own car contract, you will need to provide proof of employment. This can be done by supplying:

• Payslips: Show 2-3 months of consecutive payslips. These should show the employer’s name, year-to-date income and national insurance.
• Bank Statements: 3-6 months of bank statements will confirm consistent income deposits.
• Employment Contact/Letter: This document can confirm salary, job title and length of employment. This can be especially helpful if you have only been employed for under 3 months.
• Tax Returns: If you are self-employed, provide 1–2 years of personal tax returns.

You must also provide proof of residency in Australia. You can do this by supplying:

One of the following:

• Australian Citizenship certificate.
• Passport.
• Permanent Residency visa (VEVO check).

And one of the following for address verification:

• Driver’s licence.
• Medicare card.
• Utility bill.

The Opportunity to Build Your First Credit Score

By successfully managing a rent-to-own contract, you will begin to build a positive credit history. This will help you access further finance opportunities in the future.

Looking For a Rent-To-Own Car?

RentBuyIt offers brand-new and pre-owned vehicle options. Our rent-to-own system can be tailored to fit your lifestyle and budget. We specialise in helping those who cannot access traditional finance by offering contracts with affordable fixed weekly payments through our bad credit car finance alternatives.

Call 1300 591 811 or visit our Enquire Now webpage to contact us today. Alternatively, visit our Brisbane, Adelaide or Melbourne showrooms.