What’s the Minimum Credit Score Needed for a Car Loan?

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It’s all a numbers game when it comes to getting approved for an auto loan, and those numbers refer to a borrower’s credit score. Generally, lenders consider applicants having sub-par credit to be riskier than those having excellent credit. That means low-scoring applicants will be charged a higher interest rate and, in turn, a higher monthly payment to finance a car or truck. Consumers having the lowest credit scores may be denied a loan altogether.

What is a Credit Score?

Auto lenders evaluate an applicant’s creditworthiness based in large part on his or her “FICO” score. Created and curated by the Fair Issac Corp, FICO says its scores are used by 90 percent of the nation’s top lenders. FICO scores range from a rock-bottom 300 to a maximum 850.

According to FICO, consumers having scores in the 700-850 range are considered near-prime or prime borrowers. That means they’ll garner the lowest interest rates and most-favorable loan terms. Borrowers who fall below the 620 mark are often considered “subprime.” That means they’ll pay more to finance a car.

How are Credit Scores Determined?

FICO scores are largely based on a person’s payment history and outstanding balances. Other considerations include length of credit history, credit lines recently opened and one’s credit mix (credit cards, retail accounts, student loan, installment loans, etc.). In addition to the FICO score, a credit report will disclose all open and closed credit sources, credit inquiries/applications made and information on overdue debt, bankruptcies and civil lawsuits. Lenders will further consider an applicant’s annual income to assess how large a monthly car payment he or she can afford.

Having late or missed payments, debt collections, bankruptcies, exceeded credit limits and/or outstanding tax liens will send a FICO score plummeting.

Checking Your Credit Score

Even if you’re not buying a car just yet, it’s wise to check your credit score periodically. Federal law allows consumers to obtain one free report each year from each of the three major credit bureaus, Equifax, Experian, and TransUnion. Banks and credit card providers often provide free credit scores to its customers. Be assured that checking your credit report regularly will not adversely impact your score.

What if You Have a Poor Credit Report?

If you find an inaccuracy or mistake in your report, be sure to contact both the lender and the reporting agency to have it corrected. In a study conducted by the Federal Trade Commission, 28 percent of those participating found at least one substantive error on their credit reports.

Otherwise, you’ll want to work to improve a low credit score. Experts advise steadily paying down your existing debt, especially high interest-rate credit cards, and make all payments on time. Pay off or keep your balances minimal.

But, as FICO recommends, don’t apply for additional credit cards or close unused accounts in a misguided attempt to boost your credit score. Likewise, avoid transferring debt from one source to another. Either of these tactics could backfire and result in a lower credit score.

If you have a below-average credit score, all is not necessarily lost. Underwriting standards usually vary from one source to another. It pays to contact multiple lenders (including a credit union if you’re a member) to determine which will offer the lowest rates, given your history and current financial situation.

Credit Scores and Costs

As of this writing, FICO says those having credit scores of 720-850 can expect to pay a national average of 4.31 percent interest on a $30,000 auto loan with a 60-month term. If your score is between 690 and 719 you’ll be charged an average 5.67 percent. And it only goes up from there. Those having weak scores of 500-589 will face sky-high 16.4 percent rates. (If your FICO score is any lower, you’ll probably have trouble obtaining a loan at any cost.) Running the numbers, this means someone having a FICO score in the 500 range will pay over $10,000 more in interest over the life of a five-year $30,000 car loan than will someone having excellent credit.

On top of that, some auto insurance companies charge higher premiums (where allowed by state regulations) to motorists having poor credit. According to auto insurer State Farm, this is because drivers who have low credit scores are statistically more likely to file auto insurance claims than more creditworthy policyholders.

Editor’s note: This article was originally published in June 2015. It has been completely updated for accuracy and comprehensiveness. 

By | 2018-10-24T21:03:01+00:00 September 14th, 2018|Car Buying|64 Comments

64 Comments

  1. Breck Lewis October 13, 2015 at 8:09 am - Reply

    That’s good to know the range of a credit score. I had no idea that you had to have at least a 600 to be considered with good credit. I’ve been trying to shop around to buy a car, but I know my credit is not that good because I don’t have a lot of credit build up. I’ll have to try FICO to see what it says. What’s the best way to build your credit the fastest?

    • Steve Swanson December 24, 2015 at 9:31 pm - Reply

      Start out with a secured credit card for the maximum amount you can afford. Secured means you give them the money to cover the card. Consider one where you can increase it by increasing your deposit. One that will consider increases on their own like Capital One. Use it no more than 10% of the amount. Perhaps just gas or grocery items. You’ll find that this alone within 6 months will bump your score a good amount. Put aside money where you can and increase your own limit by increasing the hold amount. This can also result in a minor bump. Read the fine print carefully, some do not offer change from secured to unsecured. Some pay interest, others do not. Also, there is an annual fee, apply for one that is small as possible.

      • Lindsay August 25, 2017 at 11:26 pm - Reply

        Where can you find these cards I deffinetly could use 1 of these..?? This is so cool to know! Thanks

    • Michael Bauer December 31, 2015 at 2:41 am - Reply

      No that wasn’t what the article said. A good score is no where near 600. It is at least a 700. Credit scores are based on credit history…which is also in the article. No way to build fast history.

      • Maisha February 14, 2016 at 2:31 pm - Reply

        When they say you will build credit over time, when does the changes start taking place in my credit score and by how many points in every report?

        • Patricia October 29, 2016 at 7:21 am - Reply

          I start rebuilding my credit in March 2016, which was 542 and now it is 618.. I did get a secured credit card and starting paying on my student loan. I also have my payments come directly out of my checking account.. My payments is always made when they r due..

      • James Ball June 1, 2016 at 4:37 am - Reply

        Credit scores aren’t just based on history. I went from 560 to 720 on my trans union report in just 7 months. Got a credit card used under 30 percent of the balance. Then got a 5000 dollar loan off my own money and it basically pays off itself, also paid some old debits off. Scored jumped quick quick quick.

        • Janice October 2, 2016 at 7:16 pm - Reply

          Did you do a settlement on the old debt, or did you pay whats was owed?

          • Anthony January 24, 2017 at 3:27 pm

            I had a 550 with bad credit was in debt with collectors I owed 6500 settled with 3500 got 2 credit cards and went to a 620 in 30 days bought my home and have never been turned down yet it’s a beautiful thing and won’t go back

        • Danielle December 2, 2016 at 5:10 pm - Reply

          What card did you applu for?

        • Linds August 25, 2017 at 11:28 pm - Reply

          How did you get it to jump so fast?? I need help

    • hakeem j barclay July 27, 2016 at 5:36 am - Reply

      Get one of your family members mom dad brother or even a friend to put you on as a Authorized user on there credit card for 30 days or more tell them you don’t want the card but their credit history that will come from the card and pick one that’s been open the longest as well as no miss payment and your credit will rise like no other

    • hugo August 21, 2018 at 8:27 pm - Reply

      700 for good credit 600 is bad

  2. mike October 14, 2015 at 2:34 pm - Reply

    I highly recommend Nissan vehicles to anyone who is looking for a new vehicle.

    • Beverly Brusokas June 26, 2016 at 4:30 pm - Reply

      Why

    • Cheryl Lee July 31, 2016 at 9:01 pm - Reply

      Do NOT buy a Nissan. Their transmissions FAIL and they do not replace them unless you’ve gone to them for all your servicing and within the extended warranty time. Ask ANY MECHANIC about Nissan’s CVT transmissions. They’ll tell you they are pieces of crap.

      I bought a used Rogue two years ago and was not told about the PREVALENT CVT problem, NOR was I told about their extended 120k warranty on it. Well, my transmission is going out at 129k, and Nissan basically said TOUGH CRAP. I will NEVER, EVER again buy a Nissan.

      • Courtney February 19, 2017 at 12:36 am - Reply

        So true! Just had to replace the transmission in my 2010 altima and it has 116000 miles. Super lucky it went out when it did! Had it fixed with no issues from the dealership. However, I’m trading it in as soon as I can. The generation my car falls in has crap transmissions which is why nissan extended the factory warranty on them to 6 years or 120k. I hate it. Great car otherwise.

      • Jb March 19, 2017 at 11:42 am - Reply

        I have a 2011 Nissan Maxima with 58,000 miles on it. My CVT transmission went out on 2/17/17 and luckily it was covered under an extended warranty, as I bought it used and the time was out on the original warranty. But then they tried telling me they would only cover a used transmission and that I could pay the $1100 difference if I wanted a new one. After some not so nice words and threats on my part, they called 2 days later and said they would be putting a new transmission in. It took 3 weeks of phone calls and fighting before I finally got my car back. I will never by a Nissan again!!!!!!

      • Seth Anderson April 26, 2017 at 11:15 pm - Reply

        I have a 2010 Nissan Sentra with 140,000 miles and my transmission is running like new. Tough luck for you though

    • Asia December 25, 2016 at 5:52 pm - Reply

      Nissans are okay vehicles. Performance wise they are great. I had a Nisssan Maxima and it was a beast. It took me everywhere and with tune ups and regular maintenance it was great. . . up until it reached about 170K miles! Everything started coming down after that. There was SOOOO MUCH RUST on this thing I had to let it go. I bought another Nissan. This time an Altima. I live in Minnesota and it was also a beast. In below 30 degrees windchill weather – it never let me down. Started right up and got going! Again at 150K problems after problems. Head gasket leaks, noisy loud engine. RUST ISSUE FROM THE BOTTOM UP. They are an F when it comes to RUST. They rust too easily no matter how much upkeep you do on it. Not worth it. No!

    • DALE March 25, 2017 at 5:35 pm - Reply

      How did this thread go from talking about credit to cars?

      • Meka May 16, 2017 at 7:11 pm - Reply

        Lol

  3. Johnny McDermitt October 14, 2015 at 7:10 pm - Reply

    Nissan vehicles have plastic parts in their engines which wear out between 60 and 100k miles.

    • Karen October 21, 2015 at 7:26 pm - Reply

      I have a 2008 Nissan Altima and my baby has 166K miles. I haven’t done any major work on it; just regular scheduled maintenance.

    • tony November 15, 2015 at 4:07 am - Reply

      yeah thats definitely not true.. I had an Infiniti G35 (same engine as a Nissan Z) that i just wrecked and it had over 110k miles on it and all i ever did was oil changes.. one battery… one brake job… and a set of tires or two. my parents own 3 others that have had ZERO problems. your logical is idiotic.

      • Art June 25, 2016 at 12:00 am - Reply

        2007 Nissan Titan with 160k miles, 2 battery changes and 2 set of tires. Drives smooth when needed, pulls trailers when needed and races mustangs at the light with all that 5.6liter power. never had an issues. ever

      • Mae December 30, 2016 at 4:27 am - Reply

        My honda has 250,000 and is still running like she’s brand new.

        • Maegan Leonard January 8, 2017 at 10:16 pm - Reply

          Mine hit just over 400k before her motor shot I had 93 accord coupe, they’re awesome cars if you take care of them

    • Billy Bob December 7, 2015 at 7:51 pm - Reply

      Ya they have plastic pistons !! Right Johnny !!

    • Steve Swanson December 24, 2015 at 9:34 pm - Reply

      Most manufacturers have plastic in some fashion in many components. I’ve seen many Nissan/Toyotas with the highest mileage on them, indicating they last. I own a ford, my plastic is in my transmission. Fixed and its still on the road 8 years later.

    • Rhonda March 1, 2016 at 4:42 pm - Reply

      We have a 2006 Nissan Xterra with 188000k miles and it runs great with NO problems in the last 10 years! Looking for another Nissan SUV now ?

      • El Oh-L January 13, 2017 at 5:49 am - Reply

        188000k miles.. wow, that’s 188,000,000 miles…. now that’s a car!

    • Tracy May 3, 2016 at 9:21 pm - Reply

      I have a Nissan and it’s almost at 300k

      • Andre Porter December 3, 2016 at 12:44 am - Reply

        1995 pathfinder with 334,000 miles! Motors has never been opened and AC has never needed charging! Only changed radiator, two starters, two batteries, tie rods and center links! Nissans rule!

        • John December 10, 2016 at 1:31 am - Reply

          I have a Suzuki XL7 with 680,000 miles.. Still going strong and with only one oil change, a spark plug and a set of new floor mats.

  4. Karen October 21, 2015 at 7:27 pm - Reply

    And it purrs like a kitten.

  5. Jeffrey Goodman January 22, 2016 at 12:35 pm - Reply

    I am looking to get an auto loan so I can get a new car for my wife since I work a lot. My credit score isn’t great but isn’t bad either. That is good to know that it all depends on the lender. I actually have a higher credit score the 680 so that is good to know! Thanks for the help!

  6. David February 19, 2016 at 2:54 pm - Reply

    In this consumer-based world, it makes complete sense to shop around for a competitive rate on a car loan. My question is how do you do that while avoiding multiple hard credit enquiries, which can damage your credit score? Any advice? My credit score seems to update weekly (on Thursdays), so does that mean I should try and choose a lender within a week? And just “suck it up” when it comes to the hard enquiries updating to my score?

    • Jason R July 12, 2017 at 2:04 pm - Reply

      I know this is old, but you have 30 days for applying for auto loans that all go under one “Hard” hit.

  7. Sherry March 6, 2016 at 11:00 am - Reply

    Actually I just bought June 15 a 2012 Nissan Murano 39k.Love this SUV!! I had more problems with poor handling of my paperwork! Finance rep told me I had a 811 credit score when I said 800. I know great problem to have. Nissan sent my info to wrong address which I think is address that showed up on credit reports. Dealership lost title to my trade in! Screwed up new title and I still love my Murano which I plan to pay off soon. Daughter needs SUV maybe Nissan but NOT that dealership! !!

  8. Sherry March 6, 2016 at 11:02 am - Reply

    Oh I put down huge down payment to keep interest low!!

    • James Ball June 1, 2016 at 4:42 am - Reply

      If you had a 800 credit score you shouldn’t have to worry about interest period

  9. Angie May 11, 2016 at 2:49 am - Reply

    I have a credit score of about 550 does anyone know if kia would finance u for a new car im asking because a friend of mine had the same score and is riding around in a 2016 new kia

    • Pam June 15, 2016 at 3:53 pm - Reply

      Don’t buy kia had one problem with wiring , headlights and now motor locked up. Kia has not honered any warrenties. When they know these problems are common with kia. BEWARE

      • tina August 21, 2016 at 1:11 pm - Reply

        check the lemon law..if a company does not fix the problem after 3 tries then it is considered a lemon and they have to replace the car or your money.

  10. Isabel May 14, 2016 at 7:14 pm - Reply

    i was rejected for a used car loan because of my past due late payments in the past. they said my credit score from Experian was 643 but I have credit karma,I checked my scores with Experion It was 690 and the other Credit Bureau said it was 667. what should I do

    • Eric May 18, 2016 at 3:02 pm - Reply

      Unfortunately there are ALOT of different scoring models out there. Credit Karma uses the 3.0 model which has a higher end range. There is nothing to actually “do”. You should still be able to get a loan, just not with the most favorable rates (13 – 16%)

  11. jr June 8, 2016 at 10:52 pm - Reply

    those looking to finance should use a credit union, they have and will usually have the best rates. also, when looking at credit scores, contact the bureaus not these 3rd party companies.

    • Carmen July 24, 2016 at 2:55 pm - Reply

      The credit union does not always provide the best APR. I got a 0% from my dealership’s financing arm and that rate was better than what my bank offered and what the credit union would have offered. If your credit is good, your options are vast.

  12. Chris Surfcrab June 19, 2016 at 6:29 pm - Reply

    Shopping for cars I noticed you might want to stay away from Fisher-Price cars. They use a ton of plastic in it and I noticed it doesn’t have a motor. Not a happy camper right now

    • Dianna Bruhn October 28, 2016 at 7:16 am - Reply

      That’s too funny!!!!

    • Raquel November 1, 2016 at 3:36 pm - Reply

      Lol

  13. Brett September 17, 2016 at 2:06 am - Reply

    Looking for a car and my trans union is a 663. Can I make a good deal on a new car.

  14. Stacey September 28, 2016 at 11:05 am - Reply

    Fisher-Price really LOL

  15. Levar March 22, 2017 at 5:38 am - Reply

    What dealership will finance me if my credit score is 665?

    • Jason R July 12, 2017 at 2:05 pm - Reply

      many will

  16. karon white April 17, 2017 at 3:33 pm - Reply

    I checked a different site and my cedit said 675 but I checked here and it said 518-508 why the big differeince

    • nika thomas April 12, 2018 at 1:05 am - Reply

      Did you find out why the big diffrence?

  17. karon white April 17, 2017 at 3:34 pm - Reply

    hope u can help

  18. Marisa Singerman April 28, 2017 at 4:50 am - Reply

    I got a pre-approved loan from Capital One for up to $35,000 (via email) for this Lexus dealership event this week. I have a credit score of 562. What are the odds of me qualifying to get a car and the loan working out? Also any recommendations on a good 4 door? Used, under 20k, toyota, honda, hyundai, or nissan? 1st car. Need great gas mileage. Also plan on using to drive Lyft/Uber.

    • Jason R July 12, 2017 at 2:08 pm - Reply

      Put enough money down and you will get a loan. Though interest will be on the higher side. Have you ever had an Auto Loan? If you have, and NEVER had a late payment, or repo etc and payed off an auto loan, this helps more than credit rating. Also need a decent income but this all differs too.

      Toyota Camry, 4 cyl. Best Bet!

    • nika thomas April 12, 2018 at 1:06 am - Reply

      Did you go and get a car?

  19. Cheryl October 21, 2017 at 4:43 pm - Reply

    How likely is it to get a car loan with a credit score if 300, it’s terrible . However, working in improving it .

    • Nobody Special April 21, 2018 at 3:47 pm - Reply

      Your chances are very slim to none.

      Your only saving grace is that you are 18 and have no credit history.

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