Car dealerships rely on credit scores to determine if customers are eligible to receive a car loan. But what credit score do they use? What is your likelihood of approval? And what happens if you have no/bad credit? Our team at Car-N-Credit is here to answer all those questions and more!
What Credit Score Do Car Dealerships Use?
When purchasing a car, most car dealerships run your credit score to determine if you are eligible for a loan. These scores come from a variety of different credit bureaus (TransUnion, Equifax, and Experian) that collect data from creditors. Based on the length of your loan, the remaining balance, the payment history, and the monthly payment, you are given a credit score. This credit score is a measure of how “risky” it is to offer you a loan. Most car dealerships use the FICO Score 8 scale to determine your eligibility for a loan.
The FICO score is the most widely used because it is considered to be the most accurate assessment of your credit standing. It takes the scores of all three major credit bureaus to create a FICO score. Based on your score, a car dealership will make the terms of your loan—this includes loan length and APR.
Likelihood of Loan Approval
When it comes to car dealerships, your credit score is a large factor in determining if you can get a car or not. If you are unable to pay for a car in cash upfront, most car dealerships will rely on your credit score to determine if they will offer you a loan. If you are unable to get a loan then you will be unable to get a car. So, let’s break down what score you would need to get a car loan. The FICO score ranges from 300 to 850. 300 is considered a bad score and 850 is considered an excellent score.
- 850-720: Super Prime score—you will receive a loan
- 749-660: Prime score—you will likely receive a loan
- 659-620: Not Prime score—your options may be limited
- 619-580: Sub Prime score—options are severely limited, may not be offered a loan
- Below 580: Deep Sub Prime score—Likely will not receive a loan
Your likelihood to be offered a loan are very dependent on your credit score. It is possible to get a loan in the subprime and deep subprime areas; however, it is very difficult and your APR will be very high.
Loans at Car-N-Credit
At Paul Sherry Car-N-Credit, we understand the difficulty of purchasing a car with a low credit score. We know that things happen and your credit score may suffer as a result. We believe you are more than a number. That is why we don’t pull your credit score. Our financial team works with you to find a used car that fits your budget and your lifestyle. We even take it a step further and work to help your credit score. So when you purchase a car from us we report your on-time payments to TransUnion. This can increase your credit score and get you back into good financial standing.
Purchase a Used Car from Car-N-Credit
When you purchase from Car-N-Credit, we don’t rely on your credit score like other dealerships. We look at the bigger picture. Our financial team can help you get into a used car that fits your budget and needs. Contact our friendly staff to see how we can help you get into a used car. We offer a variety of loan options to customers located within 60 miles of our dealership. Our wide selection of vehicles makes it possible for you to find a car that works for you. So, come on down to our dealership in Piqua, Ohio and browse our inventory, or call us today at (937) 773-0895 for a bad credit car loan!
FAQs
In general, you'll need a FICO credit score of at least 600 to qualify for a traditional auto loan, but the minimum credit score required with vary from lender to lender.
What credit score do most car dealers use? ›
The two big credit scoring models used by auto lenders are FICO® Auto Score and Vantage.
What FICO score is used to buy a car? ›
Base FICO Score
It's not designed specifically for auto loans, but many lenders use it. It's a number between 300 and 850, and a higher score means that a person is more likely to make loan payments on time.
Do car dealerships look at Equifax or TransUnion? ›
Equifax and Experian are the most commonly used credit bureaus by auto lenders. They offer services that are directed specifically at the auto industry, and each gets a portion of their revenue from the industry.
What credit score is good enough for a car? ›
The credit score required and other eligibility factors for buying a car vary by lender and loan terms. Still, you typically need a good credit score of 661 or higher to qualify for an auto loan. About 69% of retail vehicle financing is for borrowers with credit scores of 661 or higher, according to Experian.
Which FICO auto score do most lenders use? ›
The base FICO score ranges from 300 to 850, but FICO auto scores range from 250 to 900. The FICO auto score that lenders look at is measured using the 9 XT version of auto score measurement.
Which credit score is most accurate? ›
Simply put, there is no “more accurate” score when it comes down to receiving your score from the major credit bureaus.
What credit score do you need to get 0% interest on a car? ›
Credit score: You might need a credit score of at least 740 to be considered for a 0% APR loan. The minimum credit score depends on the dealership and the car you're interested in purchasing.
What is the minimum FICO score for a car loan? ›
Most used auto loans go to borrowers with minimum credit scores of at least 675. For new auto loans, most borrowers have scores of around 730. The minimum credit score needed for a new car may be around 600, but those with excellent credit often get lower rates and lower monthly payments.
Is FICO auto score 8 or 2 used? ›
FICO score 8 and 9 are commonly used for student loans, personal loans, medical loans, credit card lines and auto loans. However, there are industry-specific FICO versions for certain types of debt as well, including auto loans, credit cards and mortgage lending.
Your credit score is crucial to determine your eligibility for a no down payment car loan. Most lenders require a FICO credit score of at least 680 before you can qualify. If your credit score falls below 680, improve your credit score before you apply to help you qualify in the future.
When a car dealer runs your credit, what do they see? ›
What does a car dealership see when they run your credit? When they run your credit, they get a report and credit score from one or more credit reporting agencies. This will help them gauge the risk of granting you car financing.
Which credit score matters most? ›
FICO scores are generally known to be the most widely used by lenders. But the credit-scoring model used may vary by lender. While FICO Score 8 is the most common, mortgage lenders might use FICO Score 2, 4 or 5. Auto lenders often use one of the FICO Auto Scores.
What is a bad credit score for buying a car? ›
No single number defines a bad credit score for a car loan. In general though, if your credit score is below the mid-600s, you can expect higher interest rates and more difficulty getting a loan. Because lenders consider many factors when approving loans, people with bad credit scores do get auto loans every day.
What is the minimum credit score for car finance? ›
There is no minimum credit score required to be approved for car finance for a number of reasons: – Different finance providers will use different third-party credit reference agencies to retrieve your credit score. A person's credit score will be different across providers as their scoring systems are unique.
What is a good APR for a car? ›
Excellent (750 - 850): 2.96 percent for new, 3.68 percent for used. Good (700 - 749): 4.03 percent for new, 5.53 percent for used. Fair (650 - 699): 6.75 percent for new, 10.33 percent for used. Poor (450 - 649): 12.84 percent for new, 20.43 percent for used.
Is 550 a good credit score to buy a car? ›
When you have bad credit – say, a credit score around 550 – getting approved for a car loan can be difficult. While you should try for a pre-approval with your bank or credit union, you more than likely are going to need a subprime lender.
Is 700 a good credit score to buy a car? ›
As you can see, a 700 credit score puts you in the “good” or “prime” category for financing, making 700 a good credit score to buy a car. While it's always a good idea to get your credit score in its best possible shape before buying a car, if you're already around the 700 range you will be good to go.
What is a good FICO score? ›
Who uses FICO score 8? ›
And even FICO Scores come in different shapes and sizes. 1 Two of the most common are the FICO Score 5 and the FICO Score 8. Both are used by lenders to determine a prospective borrower's creditworthiness. But FICO 5 is commonly used in the mortgage lending industry, while FICO 8 is mainly used by credit card issuers.
