What Credit Score Do You Need to Buy a Car? (2024)

If you’re planning to buy a new car, you’ll most likely need an auto loan to help pay for it. With the average cost of a new vehicle exceeding $47,000 today, the great majority of buyers in the United States do.

Whether you apply for a loan through the dealership or at a bank, the lender will run a credit check on you as part of the process. Here’s what credit score you’ll need to be approved for a car loan—and what you can do if your credit is less than perfect.

Key Takeaways

  • Your credit score is a major factor in whether you’ll be approved for a car loan.
  • Some lenders use specialized credit scores, such as a FICO Auto Score.
  • In general, you’ll need at least prime credit, meaning a credit score of 661 or up, to get a loan at a good interest rate.
  • If you have poorer credit, you can still get a loan, but you will probably have to pay more for it or else find a co-signer.

What Credit Scores Do Auto Lenders Use?

You don’t have just one credit score, but several of them. The scoring models use the same basic information from your credit reports but weigh certain factors differently. The two major scoring models are:

  • FICO is the best-known and most widely used scoring company. FICO Scores range from 300 to 850.
  • VantageScore is a newer competitor to FICO. Though earlier versions of the VantageScore ranged from 501 to 990, the latest VantageScore goes from 300 to 850, the same as FICO does.

The major scoring models can also provide more specialized scores for particular purposes. For example, FICO offers the FICO Auto Score, an industry-specific credit score intended for auto lenders. The FICO Auto Score uses a different weighting system from other FICO Scores, with credit utilization having a bigger impact and isolated late payments—such as a one-off mistake—having a lesser one. To further complicate matters, there are multiple versions of the FICO Auto Score.

Many car dealerships rely on a FICO Auto Score, but not all do. If you’re not sure and are curious, ask your lender which scores they check before consenting to a credit check.

What Is the Minimum Score Needed to Buy a Car?

When lenders review your auto loan application, they look at your income and credit score. Lenders divide customers into categories based on their scores, such as:

  • Super prime: 781 to 850
  • Prime: 661 to 780
  • Non-prime: 601 to 660
  • Subprime: 501 to 600
  • Deep subprime: 300 to 500

In general, lenders look for borrowers in the prime range or better, so you will need a score of 661 or higher to qualify for most conventional car loans.

What Credit Score Do You Need to Buy a Car? (1)

How to Buy a Car with a Poor Credit Score

If your score is below the prime range, you may still be able to get an auto loan—but it could be harder to obtain and more expensive. Here are three options for financing a car if you have fair or poor credit:

1. Be willing to pay a higher interest rate

If you have poor credit, lenders see you as a riskier applicant. You may be able to get a car loan, but you’ll likely pay a much higher interest rate than someone with good or excellent credit will.

For example, the average interest rate for prime borrowers purchasing new cars was 4.03% in the second quarter (Q2) of 2022. For non-prime borrowers, the rate was 6.57%, while for deep subprime borrowers, it was 12.84%.

That higher rate can add substantially to your total loan cost. For example, if you financed $37,000 with a four-year loan at 4.03% interest, you would have an $836 monthly payment and would pay $3,124 in total interest.

But if you financed that same amount and only qualified for a four-year loan at 12.84% interest, your payment would jump to $990 per month. And you would pay $10,505 in total interest—a difference of $7,381.

The Better Your Credit Score, the Lower Your Interest Rate
Prime BorrowerNon-prime BorrowerDeep Subprime Borrower
Loan Amount$37,000$37,000$37,000
Loan Term48 months48 months48 months
Interest Rate4.03%6.57%12.84%
Monthly Payment$836$879$990
Total Interest$3,124$5,175$10,505
Total Repaid$40,124$42,175$47,505

2. Go to a dealer that specializes in buyers with poor credit

If you cannot qualify for a loan at a traditional dealership, you may be able to get financing from one that specializes in buyers with poor credit. Typically advertised as “buy here, pay here” dealerships, they offer in-house financing for used vehicles.

However, these dealers tend to charge very high interest rates to offset the risk of lending to borrowers with lower scores.

3. Apply for a loan with a co-signer

If your score is in the non-prime to deep subprime range, you might consider applying for a car loan with a co-signer. A co-signer is someone, such as a family member, who is willing to apply for a loan with you and, ideally, has good to excellent credit. A co-signer shares responsibility for the loan, reducing the lender’s risk. You’re more likely to qualify for a loan and get a lower interest rate than if you applied on your own.However, if you’re unable to make the loan payments, your co-signer will be stuck with the bill.

Tip

If you shop for a loan before you shop for a car, you’ll have a better idea of how much you can afford to spend.

If I use a co-signer, will I get the same rate that they would alone?

When you apply for a loan using a co-signer, the lender considers both parties’ credit scores. So, unfortunately, you won’t get the same rate as they would if they applied alone. However, you are likely to be approved and receive a more favorable interest rate.

Can I buy a car with no credit?

It’s difficult, but possible. Lenders look at people with no credit the same way they look at people with bad credit. Typically, you will need a co-signer, or you may have to buy from a dealership that offers in-house financing.

Are interest rates the same on new vs. used cars?

Typically, pre-owned vehicle loans have higher interest rates than new vehicles. In Q2 2022, the average interest rate for a new car loan was 4.33%, while used cars averaged 8.62%.

The Bottom Line

Whether you’re looking for a new car or a used one, your credit score plays a big role in your financing options, so it’s worth knowing where you stand. You can get your credit score for free from some credit card companies and online sources.

Before heading to the dealership, it’s also a good idea to obtain auto loan quotes from one or more banks and credit unions. That can help you find the best loan deal and give you some extra leverage in bargaining with the dealer. It could also help you decide how much you can afford to spend on a car.

What Credit Score Do You Need to Buy a Car? (2024)

FAQs

What Credit Score Do You Need to Buy a Car? ›

In general, you'll need a FICO credit score of at least 600 to qualify for a traditional auto loan, but the minimum credit score required with vary from lender to lender.

What credit score do you need to buy a car? ›

Most used auto loans go to borrowers with minimum credit scores of at least 675. For new auto loans, most borrowers have scores of around 730. The minimum credit score needed for a new car may be around 600, but those with excellent credit often get lower rates and lower monthly payments.

Is 500 credit score enough to buy a car? ›

It's possible to get a car loan with a credit score of 500, but it'll cost you. People with credit scores of 500 or lower received an average rate of 14.08% for new-car loans and 21.32% for used-car loans in the first quarter of 2023, according to the Experian State of the Automotive Finance Market report.

Is a 720 credit score good enough to buy a car? ›

Recently the difference was more than a full percentage point higher for new and used car loans. That's a significant difference, and the rates are worse for lower scores. Your 720 credit score is lower than the average new-car buyer's score of 735, but higher than the typical used-car buyer's score of 675.

How much can I borrow with a 630 credit score? ›

You can borrow anywhere from a few thousand dollars to $100,000+ with a 630 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.

What credit score do you need to get 0% interest on a car? ›

And if you're hoping to score a 0% APR car loan, you'll likely need a very good or exceptional FICO® Score , which means a score of 740 or above. Before you start shopping for a new vehicle, take some time to check your credit score to see where you stand.

How much can I borrow with a 700 credit score? ›

You can borrow from $1,000 to $100,000 or more with a 700 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.

What is the lowest credit score for a car loan? ›

You may be surprised to learn that there's no minimum credit score for car loans. Some lenders offer auto financing even for people with poor credit histories. However, your credit score plays a crucial role in the rates you get as well as which lenders will work with you.

What is the easiest car company to get financing? ›

After researching the car finance industry, we think that myAutoloan is best for those with bad credit. The company offers auto refinancing, lease buyouts and loans for new and used cars. Additionally, the marketplace only requires a credit score of 575 — making it easier for subprime borrowers to get a loan.

How fast will a car loan raise my credit score? ›

How fast will a car loan raise my credit score? There's no set time frame for how long it takes a car loan to improve your credit score. After buying a car, you can expect to see your score improve after making monthly payments on time and paying down your loan balance.

How rare is a 720 credit score? ›

Who Has a 720 Credit Score?
Credit ScoreTierPercentage of Americans
720 – 850Excellent38.12%
660 – 719Good17.33%
620 – 659Fair/Limited13.47%
300 – 619Bad31.08%

How big of a loan can I get with a 720 credit score? ›

You can borrow $50,000 - $100,000+ with a 720 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.

What credit score to buy a house? ›

The minimum credit score needed for most mortgages is typically around 620. However, government-backed mortgages like Federal Housing Administration (FHA) loans typically have lower credit requirements than conventional fixed-rate loans and adjustable-rate mortgages (ARMs).

How long does it take to go from 630 to 700 credit score? ›

For instance, going from a poor credit score of around 500 to a fair credit score (in the 580-669 range) takes around 12 to 18 months of responsible credit use. Once you've made it to the good credit zone (670-739), don't expect your credit to continue rising as steadily.

How can I raise my credit score from 630 to 700? ›

6 easy tips to help raise your credit score
  1. Make your payments on time. ...
  2. Set up autopay or calendar reminders. ...
  3. Don't open too many accounts at once. ...
  4. Get credit for paying monthly utility and cell phone bills on time. ...
  5. Request a credit report and dispute any credit report errors. ...
  6. Pay attention to your credit utilization rate.

What credit score do I need for a $3,000 loan? ›

Requirements for a $3,000 Personal Loan

However, most set a minimum. Discover, for example, requires a minimum credit score of 660, while some others require a minimum of 700. Most lenders consider your whole financial situation.

Can I get a car with a 580 credit score? ›

With a bad credit score, you'll likely be offered some of the highest advertised rates. According to data from Experian, borrowers in the subprime category (a FICO score between 501 and 600) can expect an average rate of 12.28 percent for new cars and 18.89 percent for used cars.

Is 700 a good credit score to buy a car? ›

As you can see, a 700 credit score puts you in the “good” or “prime” category for financing, making 700 a good credit score to buy a car. While it's always a good idea to get your credit score in its best possible shape before buying a car, if you're already around the 700 range you will be good to go.

How much can I borrow with a 680 credit score? ›

With a 680 credit score, you can qualify for mortgages, auto loans, credit cards, personal loans, and more. However, the interest rates and loan amounts you are approved for will vary by lender. Generally, you may be able to borrow between $5,000 – $300,000, depending on the type of product.

How much of a loan can I get with a 670 credit score? ›

You can borrow $50,000 - $100,000+ with a 670 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.

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