What Credit Score Do You Need to Buy a Car?

When you're ready to buy a car, it's essential to know your credit score. It's a number that tells lenders how likely you are to pay back loans. 

A recent Experian report from the second quarter of 2024 showed that most people who financed a car had credit scores above 661.

• For used cars: The average credit score was 689.
• For new cars: The average was a higher 753.

Your credit score can vary greatly, so there's not one "magic number" you need to get a car loan. 
 

How Does Your Credit Score Affect Your Car Loan?

Depending on your credit score, lenders will offer different interest rates:
 

• Super prime (781-850): Around 5.25% for new cars and 7.13% for used cars.
• Prime (661-780): About 6.87% for new and 9.36% for used.
• Nonprime (601-660): Roughly 9.83% for new and 13.92% for used.
• Subprime (501-600): Around 13.18% for new and 18.86% for used.
• Deep subprime (300-500): High rates at 15.77% for new and 21.55% for used.

The higher your score, the lower your loan cost. For example, someone with a credit score in the low 700s could get a rate of about 9.36% on a used car loan, while someone in the mid-500s might see rates closer to 18.86%. 

Over the life of a loan, this could mean the difference of thousands of dollars in interest.
 

What’s a FICO Auto Score?

When you apply for a car loan, dealers might check your FICO Auto Score instead of the standard score. This special score (250-900 range) focuses more on your history of car-related finances, like past car loans or any auto-related legal issues. 

You can find your FICO Auto Score by purchasing it through myFICO.com.
 

Tips for Buying a Car with a Lower Credit Score

Even if your credit score isn't great, you can still work toward getting a car loan:
 

• Save for a larger down payment. It could help reduce your monthly payments and may even get you a better interest rate.
• Show proof of stable income and residence to paint a picture of financial reliability.
• Shop around for loans, checking with different lenders and even getting preapproved. This helps you find the best rate.

Remember, applying for loans can temporarily drop your credit score due to the credit check, so it's best to apply for loans within a short time span.

If your loan interest rate is higher than you'd like, making payments on time for 6 to 12 months can improve your score. Then you might be able to refinance for a better rate.

Check Out: The True Costs of Owning a Car: Budgeting Tips and Crucial Expenses to Keep in Mind
 

Improving Your Credit Before Car Shopping

If you're not happy with the loan offers you're getting, you might want to improve your credit score before buying a car:
 

• Always pay your bills on time.
• Keep credit card balances low.
• Avoid applying for other credit lines before seeking a car loan.
• Don't close old credit card accounts as it could hurt your credit score.

 

Building Credit With Your Car Loan

Once you get a car loan, making regular, on-time payments can improve your credit, helping you in the future. Lenders send your payment history to credit bureaus, which helps build your credit score.

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