What Credit Score Is Needed To Buy a Car?

Andrew Reyes
man holding toy car and money in his hands
Reading Time: 4 minutes

You want a new vehicle, and you’re wondering what credit score is needed to buy a car. There is more to the answer than a single number. You need to know your credit score, and you also should understand how your score affects the cost of your new wheels.

yellow car and credit score graphics

What Credit Score Is Needed To Buy a Car?

If you want to get a reasonable interest rate on your new car, you’ll typically need to have fair credit or better, with a credit score of at least 660.

If your credit score is higher, your interest rate and loan terms will be more favorable. The opposite is also true: If your credit score is low, you will pay a higher rate, resulting in more interest on the loan.

What Is My Credit Score and How Is It Determined?

Your credit score is a calculation that predicts whether you will be able to make your loan payments in full and on time. This determination is based largely on your current debts and your history of making payments.

Three significant factors used to calculate your credit score are:

  1. How you have handled credit in the past
  2. How much do you owe on existing credit debt
  3. How long you have had your credit lines

Other factors contribute to your credit score, although they make up a smaller portion of the final score. When determining what credit score is needed for buying a car or a home and how to attain the necessary score, begin with items that can improve your score the most.

How Do I Find My Credit Score?

You have multiple credit scores. There is the FICO score, which has been around since the 1950s and is still considered by 90% of lenders. In 2006, VantageScore debuted. VantageScore researches consumer behavior to very accurately predict future financial conduct. Your overall score will reflect a combination of these scores.

You can find your credit score through many free services online. Checking your own scores is called a “soft pull” and will not hurt your credit.

What Are Credit Categories?

Your credit score falls into one of five credit categories. Once you’ve determined what credit score is needed to buy a car and you’ve found your score, look at the credit categories. The category that includes your score can give you an idea of the interest rates that lenders will extend to you. Loan rates are often advertised using these categories.

Excellent

This is the best credit score type, and it requires a score of 800-850. “Excellent” qualifies you for the most advantageous interest rates and loan terms.

Very Good

The “very good” category requires a score of 740-799. You should have no trouble securing a loan at a competitive rate.

Good

You need a credit score of 670-739 for this category. Your interest rates are likely to be at least a point or two higher than someone with excellent credit, but you should be able to secure an auto loan.

Fair

This is the lowest credit category with which you can hope to get a conventional auto loan; it includes scores from 580-669.

You know at this point what credit score is needed to buy a car and that if you are at the lower edge of this range, your interest rate will be significantly higher than if you had very good or excellent credit.

Poor

If your score is under 580, you’ll want to take steps to improve your credit. You may still be able to secure a car loan from a specialized lender, but you’ll probably pay a very high-interest rate.

What Can I Do If My Credit Isn’t Good Enough To Buy a Car?

Now that you understand what credit score is needed to buy a car and you’re determined to attain this score, you can build up or repair your credit. While it can take a little time, there are effective methods to build or rebuild your credit. Determine your particular credit problems and follow the recommended steps to remedy them.

No Credit

If you have no credit history, you’ll be able to build your credit consciously and create an excellent foundation for your future credit. With each of these methods, use the money responsibly and make your payments on time to demonstrate that you can manage them.

Become an Authorized User on an Existing Account 

A parent or partner may be willing to add you as an authorized user on their credit account, allowing you to build your credit by using theirs.

Ask Someone To Co-Sign a Credit-Builder Loan

This is a loan that you take out for the specific purpose of building a payment history. Make your payments on time and your credit report will show your progress.

Use a Secured Credit Card

You deposit cash with the issuing bank to secure the account. The bank issues a credit card using your deposit as security. Then you use the card and make your payments to build a credit history.

Poor Credit History

In the case of poor credit history, you need to change your habits to restore your score. It can take a year or more to raise your score to the “Good” category by taking these actions:

  • Pay bills on time
  • Dispute errors on your credit report
  • Pay outstanding collections
  • Spend responsibly

Overuse of Available Credit

Lenders want to see that you are not using too much of the credit available to you. They use a calculation called the “credit utilization ratio,” which shows what percentage of your available credit you have used.

A high number indicates that you may be over-extended. Ideally, your credit utilization ratio should be 30% or lower. Paying off credit card debt reduces this percentage directly and can significantly improve your credit score.

More Questions About What Credit Score Is Needed To Buy a Car

At this point, you should have a good idea of what credit score is needed to buy a car, how your score affects your options, and how you can improve your credit. Take advantage of the resources on our website to further understand and improve your credit score.

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