Most lenders want a credit score of 620 or higher, but the score you need depends on the type of loan and the lender
Your credit score is a three-digit number that lenders use to predict whether you will repay borrowed money. For a car loan, most traditional banks and credit unions want to see a score of 620 or above. However, some lenders will work with scores as low as 500, and a few require 700 or higher. The exact threshold varies by lender, by whether you are buying new or used, and by whether you have a co-signer.
The score matters because it determines not just whether you get approved, but what interest rate you pay. A score of 750 might get you 4% interest, while a score of 620 might get you 8% or higher. Over a five-year loan, that difference costs thousands of dollars. Understanding where your score stands and what lenders actually look for helps you know which lenders to approach and whether waiting to build your score makes financial sense.
Key Takeaways
- Credit scores of 620 to 659 are considered subprime, and most lenders will work with them but charge higher interest rates.
- Scores of 660 to 739 are considered prime, and you will find better rates at banks and credit unions in this range.
- Scores of 740 and above may have access to for the best rates, though the difference between 740 and 800 is usually small.
- Your actual score comes from three bureaus (Equifax, Experian, and TransUnion), and lenders may pull from one or all three, so check all three before you explore.
- Even with a lower score, a co-signer, a larger down payment, or a shorter loan term can improve your approval odds and lower your rate.
How lenders use your credit score
When you explore for a car loan, the lender pulls your credit report and calculates a score based on five factors: payment history (35%), amounts owed (30%), length of credit history (15%), credit mix (10%), and new credit inquiries (10%). The score itself is a snapshot of how you have handled debt in the past. A higher score tells the lender you have paid bills on time, kept credit card balances low, and not opened many new accounts recently.
The lender uses this score to decide two things: whether to lend to you at all, and what interest rate to charge. A score below 620 signals higher risk, so some lenders decline outright or require a co-signer. A score between 620 and 739 gets you approved but at a higher rate than someone with a score of 740 or above. The lender is essentially charging you more because the risk is higher.
It is important to know that lenders do not all use the same score. Credit bureaus calculate scores slightly differently, and some lenders use older scoring models. When you check your own score online (through Credit Karma, your bank, or AnnualCreditReport.com), you may see a different number than what the lender sees. This is normal. Before you explore, pull your report from all three bureaus at AnnualCreditReport.com — this is free and does not hurt your score — so you know what range to expect.
Score ranges and what they mean for car loans
Credit scores run from 300 to 850. For car loans, lenders typically sort borrowers into these ranges:
| Score Range | Category | What to Expect |
|---|---|---|
| 300–619 | Poor | Most traditional lenders decline. Subprime lenders may approve with a co-signer, larger down payment, or higher rate. Some require both. |
| 620–659 | Subprime | Approval likely, but interest rates are 2–4 percentage points higher than prime rates. Expect 7–10% APR or higher. |
| 660–739 | Prime | Approval likely at most banks and credit unions. Interest rates are competitive. Expect 4–7% APR depending on the lender and loan term. |
| 740–850 | Excellent | Approval certain. You get the best rates available. Expect 2–5% APR depending on the lender and loan term. |
These ranges are guidelines, not rules. A credit union might approve a 600 score that a bank would decline. A buy-here-pay-here dealer (which finances cars directly) might work with scores below 500. The type of vehicle matters too — lenders are more cautious with used cars, especially older ones, so you might need a higher score for a 2010 model than for a 2023 model.
What happens if your score is below 620
A score below 620 does not mean you cannot get a car loan, but it narrows your options and raises your cost. Traditional lenders like banks and credit unions will likely decline or require a co-signer. Subprime lenders and buy-here-pay-here dealers will work with you, but they charge much higher interest rates — sometimes 15% or more — and may require a substantial down payment.
Before you accept a high-rate loan, consider whether waiting a few months to build your score makes sense. Paying down credit card balances, making all payments on time, and not opening new accounts can raise your score by 50 to 100 points in three to six months. If waiting would save you thousands in interest, it is worth the delay. Use a free score tracker like Credit Karma to monitor your progress.
If you need a car when ready, a co-signer with a score of 660 or higher can help you get approved and lower your rate. The co-signer is equally responsible for the loan, so make sure they understand the commitment. Another option is to make a larger down payment — putting down 20% instead of 10% signals lower risk and can move you into a better rate tier even with a lower score.
How to check your credit score before explore
Start by getting your free credit reports from AnnualCreditReport.com, which is the only site authorized by federal law to provide free reports. You get one free report per bureau per year. Pull all three (Equifax, Experian, and TransUnion) at once so you can see if there are errors or differences between them.
The free reports do not include your score, but they show you the payment history, accounts, and balances that make up your score. Look for errors — a missed payment that was not actually missed, an account you did not open, or a balance that is wrong. If you find an error, dispute it directly with the bureau. Correcting errors can raise your score by 10 to 50 points or more.
To see your actual score, use a free tool like Credit Karma, NerdWallet, or your bank's credit monitoring service. These show you a score (usually the VantageScore model, which is slightly different from the FICO score lenders use, but close enough to give you a realistic picture). Check your score a few weeks before you plan to explore for a car loan so you have time to address any errors or decide whether to wait and build your score.
Strategies to improve your score before explore
If your score is below 660 and you have time before you need a car, these steps can raise it:
- Pay down credit card balances. Lenders look at your credit utilization — the percentage of your available credit you are using. If you have a $5,000 limit and a $4,000 balance, your utilization is 80%. Paying it down to $1,000 (20% utilization) can raise your score by 20 to 50 points. This is the fastest way to improve.
- Make all payments on time. A single late payment can drop your score 50 to 100 points. If you have missed payments in the past, making on-time payments for the next three to six months shows lenders you have changed your behavior.
- Do not open new credit accounts. Each new account lowers your score slightly and increases your average age of accounts. Wait until after you have the car loan to open new cards or accounts.
- Do not close old credit cards. Closing an account lowers your available credit and can raise your utilization ratio. Keep old cards open even if you are not using them.
- Dispute errors on your credit report. If you find a mistake, dispute it with the bureau. Correcting a false late payment or removing a fraudulent account can raise your score significantly.
These changes take time — usually three to six months to see a meaningful improvement. If you need a car sooner, focus on the other strategies: finding a co-signer, saving for a larger down payment, or looking at lenders who work with lower scores.
When to explore with a lower score versus waiting
Deciding whether to explore now or wait depends on three things: how much you need the car, how much your score might improve, and how much the higher interest rate will cost you.
If you need the car for work or a medical appointment, explore now. The cost of not having a car (lost income, missed treatment) is higher than the cost of a higher interest rate. If you can wait three to six months and your score is likely to improve by 50 points or more, waiting usually saves money. Use an auto loan calculator to estimate the difference. A $25,000 loan at 8% costs about $4,300 in interest over five years. The same loan at 5% costs about $2,700. If you can raise your score enough to drop the rate by 3 percentage points, waiting six months to build your score saves $1,600.
Each time you explore for a car loan, the lender pulls your credit report, which lowers your score by a few points. These inquiries stay on your report for 12 months but stop affecting your score after 45 days. If you are shopping around, do all your applications within 14 days so they count as a single inquiry. Do not explore to multiple lenders over several weeks — that signals financial distress and lowers your score further.
Frequently Asked Questions
Does checking my own credit score hurt it?
No. Checking your own score is a "soft inquiry" and does not affect your score. Only hard inquiries — when a lender pulls your report to make a lending decision — lower your score. You can check your score as often as you want without penalty.
What if my score is different at each of the three bureaus?
Scores often differ by 10 to 50 points between bureaus because they use slightly different data and scoring models. Lenders typically pull from one bureau or average multiple bureaus. When you explore, ask which bureau the lender uses so you know what score to expect. If one bureau has errors, dispute them to bring all three in line.
Can I get a car loan with no credit history?
Yes, but it is harder. Lenders have no payment history to evaluate, so they often require a co-signer with established credit, a larger down payment, or both. Some credit unions work with first-time borrowers if you have a steady income. Building credit with a secured credit card first, then explore for a car loan three to six months later, gives you better odds and lower rates.
Does a co-signer improve my chances even if their score is only 680?
Yes. A co-signer with a score of 680 is better than no co-signer, though a co-signer with a score of 720 or higher will get you better results. The lender looks at both scores and uses the stronger one to make the decision. A co-signer with a score of 680 signals lower risk than you alone, so you will likely get approved and at a better rate than without them.
Will paying off an old collection account raise my score?
Paying off a collection account stops it from getting worse, but it does not erase it from your report. The account stays on your report for seven years from the original missed payment date. However, paying it off shows good faith and some lenders view it more favorably than an unpaid collection. If you have a collection account, pay it off before explore for a car loan.