Most lenders want a credit score of 620 or higher, but the score that matters depends on the lender
There is no single minimum credit score required by law for a car loan. Instead, each lender sets its own floor. Traditional banks often want scores of 660 or above. Credit unions may go lower, sometimes to 580 or 600. Subprime lenders — who specialize in lending to people with lower scores — may approve loans for scores in the 500s. The catch is that a lower score usually means a higher interest rate, which makes the loan more expensive over time.
Your score is one piece of what a lender looks at. They also consider your income, employment history, how much you still owe on other debts, and whether you have made recent late payments. A score of 650 with steady income and no recent missed payments may get you approved where a score of 680 with spotty employment history might not.
Key Takeaways
- Credit scores of 620 and above open doors at most lenders, but traditional banks often prefer 660 or higher.
- Credit unions and subprime lenders may work with scores below 620, though interest rates will be higher.
- Your score is not the only factor — lenders also weigh income, employment stability, and recent payment history.
- Shopping with multiple lenders takes time but can reveal which ones will work with your score and what rate each will offer.
- Getting preapproved before you visit a dealership shows you what you can actually borrow and at what rate.
How credit scores affect your interest rate
A lower credit score does not just make approval harder — it makes the loan itself more expensive. If you borrow $25,000 over five years, the difference between a 5% interest rate and a 10% interest rate is thousands of dollars in extra payments. Someone with a score of 750 might get 5%, while someone with a score of 600 might get 10% or higher from the same lender.
This is why your score matters even if you can find a lender willing to work with it. Before you sign, ask what rate you are being offered and compare it to what other lenders quoted. A lower score does not mean you have only one option — it means you need to look harder at your options.
Where different types of lenders draw the line
Traditional banks typically want scores of 660 to 680 and up. They have strict lending standards and lower tolerance for risk. If your score is below 660, a bank may decline you outright or offer a rate so high that other lenders become cheaper.
Credit unions often have more flexible standards than banks. Many will consider scores in the 580 to 620 range, especially if you have been a member for a while or have other accounts with them. Credit unions also tend to offer lower rates than banks for the same credit profile, so it is worth checking whether you are a member or can join one.
Subprime lenders specialize in borrowers with scores below 620. They may approve you with a score in the 500s, but they charge significantly higher interest rates to offset the risk. Subprime loans can be a path forward if no one else will lend to you, but the cost is real — you will pay much more over the life of the loan.
Dealership financing is often a middle ground. Dealerships work with multiple lenders and can sometimes route your process to one that fits your score. However, dealership rates are often higher than what you could get by shopping on your own first. Get preapproved elsewhere before you walk onto the lot so you know what you are actually being offered.
What to do if your score is below 620
If your score is too low for the rates you want, you have a few paths. The first is to wait and improve your score before you explore. Paying down existing debts, making all payments on time for several months, and correcting errors on your credit report can raise your score. Even a 30 or 40 point increase can move you into a better lending tier.
The second is to find a cosigner — someone with a higher score who agrees to be responsible for the loan if you do not pay. A cosigner does not have to put money down, but they are legally liable if you default. This is a serious commitment for them, and it only works if the cosigner actually has a better score and income than you do.
The third is to accept a subprime loan now and refinance later. If you make payments on time for 12 to 24 months, your score will improve and you may be able to refinance at a lower rate with a different lender. This works only if the original loan does not have a prepayment penalty — ask before you sign.
How to check your score before you explore
You can see your credit score for free through several channels. AnnualCreditReport.com lets you pull your credit report from all three bureaus (Equifax, Experian, and TransUnion) once per year at no cost. Your report does not include your score, but it shows the information lenders see.
Many credit card companies, banks, and financial websites now show your score for free as part of your account. Credit Karma, NerdWallet, and similar sites also offer free scores. These free scores are usually close to what a lender will see, though they may use a slightly different scoring model.
Before you explore for a car loan, pull your report and your score. Look for errors — wrong payment dates, accounts you did not open, or debts listed twice. You can dispute errors directly with the credit bureau. Fixing errors can raise your score before you explore, and it prevents lenders from seeing false information.
Getting preapproved to know your real options
Preapproval means a lender has looked at your credit and income and told you how much they will lend you and at what rate. It is not a may provide, but it is much closer to a real offer than a general estimate. Preapproval also shows you what you can actually afford before you fall in love with a car at the dealership.
Contact your bank, credit union, and one or two online lenders. Each will pull your credit report and give you a preapproval letter with a loan amount and rate. This process takes a few days. The hard inquiries from multiple lenders within a short window (usually 14 to 45 days, depending on the scoring model) count as a single inquiry, so shopping around does not hurt your score as much as you might think.
Once you have preapproval in hand, you know your floor. If a dealership offers you a worse rate, you can decline and use your preapproval instead. If they offer something better, you can compare. Either way, you are negotiating from a position of knowledge rather than guessing.
Frequently Asked Questions
Can I get a car loan with a credit score of 550?
Yes, but only from subprime lenders who specialize in lower scores. The interest rate will be significantly higher — often 12% to 18% or more — which makes the loan much more expensive. Before accepting a subprime loan, spend a few months paying down other debts and making all payments on time to raise your score, if you can wait.
Does getting preapproved hurt my credit score?
Preapproval involves a hard inquiry, which lowers your score by a few points temporarily. However, multiple inquiries from lenders within 14 to 45 days typically count as one inquiry. Shopping around for the best rate is worth the small, temporary dip in your score.
What if I have no credit history at all?
No credit history is different from a low score. Lenders have no data on you, which makes them cautious. A credit union or subprime lender may work with you, especially if you have a cosigner. You might also build credit first by getting a secured credit card or becoming an authorized user on someone else's account, then explore for a car loan in six to twelve months.
Can I improve my credit score quickly before explore for a car loan?
Significant improvements take months, not weeks. Paying down credit card balances lowers your utilization ratio and can raise your score within 30 days. Making all payments on time for several months shows lenders a pattern of reliability. Disputing errors on your report can help when ready if errors exist. Plan for at least two to three months of good behavior before you expect meaningful improvement.
Is it better to explore with a credit union or a bank?
Credit unions often have lower minimum scores and lower rates than banks, especially if you are already a member. Banks have stricter standards but may offer better rates if your score is high. The best approach is to get preapproved from both and compare the actual offers, not the general reputation.