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What Is A Decent Credit Score To Buy A Car

While there is no specific minimum credit score to buy a car, your credit rating is an important factor in the financing approval process and determining your interest rate. In fact, according to FICO, most auto lenders use what's called a FICO Auto Score as part of their lending decision[1].

what is a decent credit score to buy a car

If you are wondering, "What is a good credit score to buy a car?" you have come to the right place. Your credit score matters a lot when buying a car. Let's take a look at what you need to know about credit history and auto financing.

According to Experian data in the second quarter of 2021[2], the lowest auto loan rates are reserved for people with a higher credit score above 780 (also known as a prime credit score). Borrowers with a subprime credit score below 500 have difficulty getting approved for car financing.

These borrowers may struggle to qualify for a car loan. If you do qualify, you can count on paying the highest interest rates. Borrowers with very poor credit scores typically have many late or missed payments, bankruptcies, or other serious negative information on their credit report. Borrowers in this range would pay around 14.4% for a car loan, according to Experian.

Very good credit scores are typically reserved for borrowers with a history of on-time payments and low credit balances. These borrowers typically have multiple credit accounts and a history showing they can manage multiple accounts with on-time payments and get close to the best interest rates available.

If you are worried about being subprime and getting approved or just want to save money with a lower interest rate, you can take action today to improve your credit score. First step? Check your credit report from the credit reporting agencies (you can get a free copy every 12 months from each bureau at to see where you stand and how you can improve your credit rating. is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.

While there is no official minimum credit score required to apply for auto loans, lenders have minimum standards that they look for when reviewing your application. And, as a general rule, the lower your credit score, the more interest you will be charged.

The minimum credit scores to qualify for auto loans vary based on the lender and the car you are looking to finance. Some lenders may consider you if your credit score is below the advertised minimum if you are a current customer or can otherwise prove to them that you are a low-risk borrower.

A credit score is a numerical representation of how likely you are to repay a loan. The higher your credit score, the less risky you are considered and the more likely you are to receive a favorable interest rate on your loan and better terms.

The FICO score is the most widely used score for auto loans. The score ranges from 300 to 850. The score is calculated based on credit mix, payment history, amount owed, average credit history and available credit.

Those with credit scores under 500 are considered to have deep subprime credit and will likely face the highest interest rates. The average auto loan interest rate for the deep subprime category was 12.93 percent. But, depending on your income and other factors, you may not even qualify for financing with a credit score of 500.

While knowing your credit score will be a key factor in the auto loan approval process, it is not the only factor. Keep up to date with your credit score and work to improve it if you struggle to meet the minimum score requirement.

Nearly everyone can qualify for a car loan and buy a car, no matter their credit score. However, the lower the score you have, the more expensive buying a car will be. Buyers with extremely low scores can easily find themselves falling prey to predatory lenders, and will need to consider whether having a car is worth the high price of its financing.

To get an auto loan without a high interest rate, our research shows you'll want a credit score of 700 or above on the 300- to 850-point scale. That's considered prime credit, and lenders don't have to price much risk into their rates.

The absolute best auto loan interest rates are reserved for borrowers with scores of 750 or higher. These super prime borrowers represent little risk to lenders. They almost always make their payments on time, and they pay their financing off as agreed in their loan documents. Of course, bad things happen to even the best borrowers, so lenders price some risk into the interest payment.

To qualify for these money-saving offers, you need to have a top-notch credit score. That means that even a score of 750 may not be eligible. Car deals are another reason you want to check your credit scores and the credit history behind them well before you're in the market for a new car. A difference of just a few points may be the difference between getting a car deal that saves you thousands of dollars and missing out on the offer altogether.

As we mentioned earlier, credit scores are based on the information in your credit reports. They include information about your payment history, how much credit you have available, how much debt you have relative to the amount that is available to you. Each model is slightly different, and many are proprietary, but here's an example of the components and weight using publicly available information about the FICO scoring model.

In addition to the amount of credit you have, your credit score also reflects the amount of time you have honored your debt payment commitments. The longer you have responsibly managed credit, the higher your score will be.

There are several things you'll find on a credit report that don't affect your credit score. Factors like where you live, your occupation, some types of credit inquiries, and your salary are not included. Of course, your lender will ask for your salary on any loan application so that they can determine your debt-to-income ratio. That ratio is another critical factor lenders consider when making car loan decisions.

While some of it may appear on your report, demographic information, such as age, race, gender, or marital status is not used in determining your score. It is not legal for a credit reporting agency to consider whether you receive public assistance when assigning a rating.

In general, information about utility, cable, or cell phone bills does not count for or against your score, though opting for the Experian Boost product mentioned in an earlier section can bring those payments into the mix.

Deep Subprime (300-500): Car buyers in the lowest credit tier will find it difficult to get a car loan. If they can get one, they'll pay extremely high interest rates. Having a score in this range tells lenders there is considerable risk in extending financing, and there's a good chance the loan will not be repaid.

When you have prime credit, you'll likely be inundated with credit card offers in your mailbox and email. While the temptation to get more credit can be strong, it's smart to be careful. Applying for credit cards will cause a "hard pull" of a credit report, which lowers your score by a few points. Adding additional amounts of credit will also lower your score, especially if you go on a shopping spree and carry balances on your new cards.

Super Prime (781-850): Shoppers with a credit score that is considered super prime have access to the lowest interest rates, most generous auto loan terms, and special low-interest financing deals offered by automakers. According to Experian, they earn interest rates that are about 1% lower than even prime borrowers, and tend to have lower car payments than borrowers in any other credit class.

To put it simply, the higher your credit score, the lower your interest rate will be, and the less restrictive the loan terms will be. Having a high credit score can save you thousands of dollars on the total cost of your financing. Because of the more generous loan terms offered, borrowers with high credit scores will generally have less chance of owing more on their cars than the vehicle is worth.

The same buyer with a credit score in the nonprime category could expect an average interest rate of 7.77%, which would give them a monthly payment of $544, according to our auto loan calculator. They would pay a total of $5,670 over the term of the loan. The total cost of their car would be $35,670.

Each year you are entitled to view your credit reports (not scores) from each of the three major credit bureaus for free, with no strings attached. The only site authorized to provide them is Beware of similarly sounding sites that will charge you to access your reports. The full credit reports you receive from will not include your credit score, though they will offer to provide it for an additional fee. Fortunately, there are many other places to access it for free, so you can avoid the extra charge.

While you can destroy your credit score in a matter of months, improving it takes time and patience. Despite advertisements that promise to improve your score in an instant (for a fee), doing it the right way is a long process. That's one reason it's critical to check your credit scores well before you consider buying a new ride.

A better idea is to pay as much as you can toward your credit card and other debt balances each month. Doing so lowers both the amount of debt reported to the credit bureaus and your utilization of credit. Start by paying the extra on your highest interest rate debt first. That makes the biggest dent by attacking the principal balance. When that card is paid off, start working down the balance on the account with the next-highest interest rate. It might mean making sacrifices other places in your life, but building your credit score will save you money in the long run. 041b061a72


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