Credit Score Requirement to Buy a Car

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The pandemic has been significantly influencing people’s finances and spending habits. In 2021, the average credit card spend is lower compared to previous years. One of the reasons is that people struggle with their financial situation.

If you want to get a car but don’t have enough money, borrowing is a viable solution. Here your credit score comes into play. In this article, we will explain what credit score you need to buy a car and how to improve it.

What Credit Scores Do Auto Lenders Use?

Your credit score is a major deciding factor whether you’ll get a car loan or not, especially if you’re trying to get car finance with no down payment option. However, there are various types of credit scores, which are specific scoring models that auto lenders use. While they are different from the actual score, these models use the same credit reports but assess the factors in a different way.

There are two main scoring models:

1. Fair Isaac Corporation (FICO)

FICO is one of the most used scores. It’s a three-digit numbered score that was introduced to determine whether you can repay a loan. FICO scores vary from 300 to 850, the latter being the perfect rating.

2.  VantageScore

This is a new competitor of FICO. VantageScore was developed in 2006 by three credit bureaus: Equifax, TransUnion, and Experian. This is calculated based on five factors:

  • Total credit balance, available, and usage
  • Payments history
  • Age of credit history
  • Credit experience
  • Newly opened accounts

Moreover, it boasts advanced algorithms and machine learning techniques to calculate more accurate ratings. But like FICO, VantageScore also ranges from 300 to 850.

Credit Score Requirement and Interest Rates

Minimum credit score requirements vary from lender to lender. However, there are generally accepted or standard score ranges. Lenders assess both your income and credit score, which can belong to any of the following categories:

  • Super prime: 781 to 850
  • Prime: 661 to 780
  • Non-prime: 601 to 660
  • Subprime: 500 to 600
  • Deep subprime: 300 to 499

Interest rates vary from category to category. Here’s a table showing the summary of scores and interest rates based on Experian:

Credit Score Average Loan Rate (New Car) Average Loan Rate (Used Car)
Super Prime (781-850) 2.34% 3.66%
Prime (661-780) 3.48% 5.49%
Non-prime (601-660) 6.61% 10.49%
Subprime (500-600) 11.03% 17.11%
Deep subprime (300-499) 14.59% 20.58%

Based on this table, it’s clear that loan rates for getting used cars are higher compared to the rates for new vehicles. Moreover, it’s also clear that used and new cars rates go higher as the credit score gets lower. This means lower costs if you have a good credit score.

In this sense, it’s best if you have a credit score of at least at prime level. Lenders prefer borrowers with credit scores of 661 and higher. For example, if you have a 785 credit score and your acquaintance – 665,  and both of you want to get a loan for a new car, you’d get different rates. And technically, if you apply for a similar loan amount, you’d still pay less monthly than your friend.

Tips on How to Get Car Finance With a Low Credit Score

If you have a lower credit score, below super prime or prime, and you want to appeal more to the finance committee you’re applying to; there are some things you can still do to improve your chances.

You can try the following:

  • Offer a more significant down payment. This will lower your monthly payment and can help offset a bad credit score. There’s also a chance of getting a lower interest rate. A big down payment can improve your creditworthiness in the lender’s eyes.
  • Bring documents. These can prove to lenders that you’re financially stable. These can include pay stubs and proof of your address that shows how long you’ve been living at a particular location and been occupied.
  • Apply with a cosigner. Applying for a loan with someone who has an excellent credit score can get your loan accepted. The cosigner will share the loan responsibilities, reducing the risks for lenders.

How to Improve Your Credit Score?

The best way to qualify for a car loan is to have a high credit score. If you have a poor rating, here are some ways you should do to improve it:

  • Make consistent on-time payments and pay up any past-due debts.
  • Regularly monitor your credit report.
  • Keep low credit card balances by lowering your credit utilization.
  • Avoid applying for other loans.
  • Keep your credit card accounts open.
  • Request for an increase of credit limit.
  • Don’t unnecessarily use extra credit unless needed.


There’s no minimum required credit score to get a car. However, your rating will greatly affect the chances of you getting a loan and the amount of monthly installments.

You will easily get qualified with a high credit score and receive lower rates compared to the terms for those with a low credit score. But, there are still ways you can get a car with a poor rating. Most importantly, there’s always a way to improve your score overall.

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The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.