What Credit Score is Used to Buy a Car

Understanding the complexities of credit scores and how they affect the purchase process is essential when purchasing a car. Whether you’re looking for a credit card, a mortgage, or financing for a car purchase, your credit score significantly impacts the loan terms and conditions.

What Credit Score is Used to Buy a Car

So, what is the credit score needed to buy a car? In this article, we’re going to go into the details.

What is a Credit Score?

A credit score numerically represents a person’s creditworthiness, reflecting their likelihood of repaying debts based on previous financial conduct. It is developed by assessing various factors, such as payment history, credit utilization, credit history length, credit account types, and new credit queries.

Importance of Credit Scores in Car Buying

When buying a car, especially if financing is involved, your credit score has a big impact. Lenders use credit scores to determine the risk of giving money to potential borrowers. A higher credit score usually translates into cheaper interest rates and better loan terms, whereas a lower score may result in higher interest rates or even problems getting financing.

Credit Score Model Used for Car Buying

There are various credit scoring models, but the two most often used are


The Fair Isaac Corporation developed FICO scores, which are widely used by lenders and exist in a variety of versions targeted to certain industries, such as auto loans. FICO is the best-known and most widely used credit score company. FICO scores vary from 300 to 850.


VantageScores, developed collectively by the three major credit agencies (Equifax, Experian, and TransUnion), provide an alternate scoring model but are less widely used in auto lending decisions.

VantageScore is a new competition to FICO. Though previous versions of the VantageScore varied from 501 to 990, the most recent VantageScore ranges from 300 to 850, just like FICO.

What Credit Score is used to Buy a Car

While there is no uniform minimum credit score required to obtain a car loan, lenders usually have their own set of criteria. Prime lenders, who offer the most competitive rates, prefer clients with credit scores in the good to outstanding range (usually 660 and above).

Subprime lenders, on the other hand, cater to borrowers with lower credit scores but often impose higher interest rates and more strict terms

Prime lenders

Prime lenders are banks or companies that lend money to people with good credit histories. These borrowers usually have high credit scores, often above 660 on the FICO scale. Prime lenders prefer customers who pay bills on time, handle debt well, and have steady incomes.

They offer better loan terms like lower interest rates, longer repayment periods, and higher loan amounts compared to lenders who work with people with lower credit scores.

Subprime lender

A subprime lender is a financial institution that specializes in providing loans to borrowers with less-than-perfect credit histories. These borrowers typically have credit scores below the prime threshold, often defined as around 660 or lower on the FICO credit scoring scale.

Subprime lenders cater to individuals who may have encountered financial difficulties in the past, such as missed payments, defaults, bankruptcies, or high levels of debt.

What Is the Minimum Credit Score for Buying a Car?

When lenders assess your auto loan application, they consider your income and credit score. Lenders categorize consumers according to their scores, such as

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

In general, lenders prefer customers with credit scores in the prime range or greater, thus you must have a score of 661 or higher to qualify for the most conventional car loans.

How to Purchase a Car with a Poor Credit Score

If your credit score is lower than the prime range, you may still be able to secure a car loan, but it will be more difficult and expensive. Here are three choices for financing a car if you have fair or poor credit:

Be willing to pay higher interest rates

If you have bad credit, lenders consider you a riskier applicant. You may be able to secure a car loan, but you’ll probably pay a significantly higher interest rate than someone who has good or excellent credit.

Visit a dealer that specializes in buyers with a low credit score

If you are unable to qualify for a loan at a typical dealership, you may be able to obtain financing from one that specializes in buyers with poor credit.

They typically advertise as “buy here, pay here” dealerships and provide in-house finance for used vehicles. To compensate for the danger of lending to consumers with poor credit ratings, these dealers typically demand extremely high-interest rates.

Apply for a loan with a cosigner

If your credit score is in the non-prime to deep subprime category, you should consider applying for a car loan with a co-signer.

A co-signer

A co-signer is someone, such as a family member, who is willing to apply for a loan alongside you and has good to excellent credit. A cosigner bears responsibility for the loan, lowering the lender’s risk.

You are more likely to get approved for a loan and receive a cheaper interest rate than if you applied on your own. If you are unable to make loan payments, your co-signer will be responsible for the amount.

Improving Your Credit Score for Car Buying

If your credit score isn’t where you’d like it to be, there are steps you can take to improve it before applying for a car loan:

Check Your Credit Report

Obtain a copy of your credit report from each of the three major credit bureaus and review it for errors or inaccuracies.

Pay Bills on Time

Payment history is a significant factor in credit scoring. Consistently paying bills on time can have a positive impact on your credit score.

Reduce Credit Card Balances

Aim to keep credit card balances low relative to your credit limits. High credit utilization can negatively affect your credit score.

Limit New Credit Inquiries

Multiple credit inquiries within a short period can signal risk to lenders. Limit new credit applications when possible.

Diversify Your Credit Mix

Having a mix of credit accounts, such as credit cards, installment loans, and mortgages, can positively influence your credit score.

Frequently Asked Questions

Can I negotiate interest rates for a car loan based on my credit score?

Yes, you can negotiate interest rates for a car loan based on your credit score. If you have a good credit score, you may be eligible for lower interest rates and can negotiate even better terms with the lender.

However, remember that lenders have their lending requirements and may have limited flexibility in rate negotiations.

Should I check my credit score before buying a car?

Yes, monitoring your credit score before purchasing a car is recommended. Knowing your credit score and creditworthiness can help you better prepare for the car-buying process, negotiate loan terms, and possibly qualify for better financing.

What credit score is required to buy a car?

The credit score needed to buy a car varies based on the lender and the sort of financing you’re looking for. Prime lenders want credit scores ranging from good to exceptional (660 and above), but subprime lenders may work with clients with lower ratings.

What is the difference between FICO and VantageScores?

FICO scores and VantageScores are the two most popular credit rating schemes. The Fair Isaac Corporation develops FICO scores, which are commonly utilized by lenders.

VantageScores, produced jointly by the three major credit agencies, provide an alternate scoring approach. While both types of ratings assess creditworthiness, they may have different scoring criteria and ranges.

Can I buy a car without credit?

It is challenging, but not impossible. Lenders treat persons with no credit in the same manner that they do people with bad credit. Typically, you may need a co-signer, or you may be required to purchase from a dealership that provides in-house financing.


When purchasing a car, your credit score is an important factor in determining your financing options and terms.

Understanding the function of credit scores, the different types of scores, and how to increase your credit score will help you make informed decisions and get the best financing for your next auto purchase.

Whether you’re in the market for a brand-new or solid used vehicle, a good credit score can open doors.

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