What is a good credit score to buy a car? Excellent to very good credit, which is usually a FICO score of between 720 to 850, is a good safe range. However, lower scores can work as well, and we will get into more details below.
What Credit Score Do I Need to Buy a Car?
The higher your credit score is the higher the chance of getting loan approval and being quoted with higher interest rates. A FICO credit score of anywhere beyond 720 is accepted by most car lenders, and your interest rate will be at a reasonable level. 723 is the median credit score in the US, so if your score is 720 and higher, you are doing better than at least 50% of the population.
Nowadays, to secure the best rates, having an even higher credit score, ranging from 760 – 850, will give you an even further advantage. A ballpark interest rate for individuals in the 760 and above range is around 3.2% vs. 4.5% as you slide towards the low 700s and under.
A credit score of 620 – 719 is still OK to apply for a car loan with, and they are within prime interest rate levels. However, they will not be rated as highly as FICO score 720 and beyond. It is below the median credit scores of people in the US, so your credit worthiness is rated to be lower than 50% of the population.
A more general overview on good credit scores can be found in on the Whats a Good Credit Score? page.
Minimum Credit Score To Buy A Car
Based on recent surveys, at the very least, you need a minimum FICO score of 500. As your credit score falls below 550, you are in dangerous territory as far as being approved for an auto loan is concerned. You will likely have to approach second chance auto lenders who are lenders specializing in car loans for bad credit scores.
Very popular in the market today are buy here pay here car lots that will offer in-house financing for their cars. These car lots accepts almost anyone, even people with credit scores of 500 and lower. As much as it may sound great, this path to getting a car is also fraught with roadbumps. Customers complain about paying through their nose on the interest, as well be being sold very old cars with super high mileage. You can read more on the www.buyherepayhere-carlots.com website.
3 Bureau Credit Scores
Bear in mind that credit reports and scores are provided by 3 different reporting bureaus. A good rule of thumb is to inquire about the brand of report and/or score that the automobile financing company will use – Experian, Equifax, TransUnion.
Other Factors to Consider
The question “What is a good credit score to buy a car?” is only the first step in a series of questions you need to consider. Other factors come into play. If you do well on these factors, it will give a boost to your chances of getting approved for a car loan, even with a lower credit score. These factors include but are not limited to:
- Employment status
- Amount of income (gross and net)
- Previous loan defaults, especially auto loan defaults
- Previous or active bankruptcy filing
- Applicable personal insurance
- Previous car insurance
- Previous involvement in traffic violations
- Savings accounts
In final analysis, knowing what is a good credit score to buy a car is a great first question to ask when you are seeking an auto loan. It allows you to understand where you stand, if your credit score is good enough to get approval and receive low interest rates. If it is low, you could delay your purchase by a few months so that you can work on building up your credit.