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What are the Credit Score Requirements for an Auto Loan?

Credit Sesame

If you want to finance a new or used car, it’s important to pay close attention to your credit score because it can have a big impact on your ability to get the car (and at a great rate). If you want to know the requirements for getting an auto loan, keep reading.

Credit Score requirements for your auto loan in 2019

The average credit score for a new-car loan in 2017 was 721 and 641 for a used car loan. However, the range of credit scores among people who purchased a car in 2017 runs the gamut, so you can still get a loan with a lower than average score — but the terms might not be as great.

First, let’s take a closer look at the average credit score when buying a new or used car each year from 2015 to 2017.

Average Credit Score for Buying a New or Used Car

Average Credit Score201520162017
New Car718714721
Used Car658655641
Source: Credit Sesame followed 1000 Members for three years documenting their average credit scores when buying a new or used car. The study began January 2015 and concluded December of 2017.

As you can see, the average credit score for those consumers who purchased a new car has risen slightly since 2015 — up to 721 from 218. However, the average credit score for those consumers purchasing a used car has dipped slightly over the same time period, down nearly 20 points.

Now, let’s see a breakdown of credit score ranges for those who purchased a new or used car in 2017.

Percentage of New & Used Car Loans Distributed Among Credit Rank of Consumers


Credit ScoreNew Car Loan in 2017Used Car Loan in 2017
Bad (550<)1%3%
Poor (551+)12%10%
Fair (650+)17%18%
Good (700+)19%28%
Very Good (750+)22%25%
Excellent (800+)24%16%
Source: Credit Sesame followed 600 Members in 2017 documenting their choices for automobile financing and purchasing decisions and were divided by FICO Credit Score Ranking. The poll was conducted from January 2017 until December of 2017.

Not entirely surprisingly, more consumers with excellent credit (a score of 800 or higher) purchased a new car than a used car. Interestingly enough, the only other group where this was the case was among those consumers with poor credit (a score of 551-649). This could be due, in part, to special new car financing offers offered at dealerships throughout the year.

So, why is it important to understand the credit score requirements for getting an auto loan?

Why understanding the credit score requirements for an auto loan is important

Understanding the credit requirements to get an auto loan is important because it can help you to be informed and make sound decisions when purchasing a car. By knowing the credit requirements, perhaps you’ll decide that you want to wait until your credit score improves before applying for a loan. Or, maybe you need a car now and you don’t qualify for an auto loan — knowing this will help you understand that you may need to find a cosigner for your loan. The bottom line is simple: knowledge is power, and understanding the credit score requirements for an auto loan can help you make better decisions, saving yourself a significant amount of money in the process.

What is the average credit score needed to get an auto loan?

As discussed, the average credit score for new loans is 721 and for used car loans is 641. But keep in mind that this information doesn’t even come close to telling the whole picture of what’s needed to get an auto loan. It’s important to also know that there are other factors that are looked at.

Your credit score is a 3-digit number, but it is anything but arbitrary. Your credit score is a direct reflection of certain information that is found in your credit report, including:

  • Payment history. Your payment history is the single largest contributing factor to your credit score. With this in mind, it is import to make all of your payment on time, every time. By making at least the minimum payments due on time, you’re on the right track to have a great credit score.
  • Credit utilization. The second most important factor to your credit score is your credit utilization, or the percentage of your total available credit that you are using at any given point in time. You should aim to always keep this number below 30% — however, those with the best credit scores tend to have a credit utilization between 1 percent and 10%.
  • Credit age. The age of your credit history also impacts your score. Lenders like to see a long-standing use of responsible credit. To make the most of this factor, if possible, always keep your oldest accounts open, even if you rarely use them anymore.
  • Different types of credit. Lenders also like to see a good mix of credit types on your credit report. To diversify your credit portfolio, consider taking out a credit builder loan if you currently only have credit cards. Similarly, if you only have a student loan for example on your credit report, consider applying for a secured credit card.
  • Number of inquiries. Lastly, the number of hard inquiries on your credit report also impacts your score. While checking your credit yourself (such as when you check your credit score on Credit Sesame) will never hurt your credit score, a hard inquiry on your

credit (such as when applying for a new line of credit) will. For this reason, only apply for new credit when necessary.

Each of these factors also carries its own weight, or the degree to which it impacts your credit score. Let’s take a closer look at this here:

FICO scoring model calculation (weight) factors

Credit FactorsCredit Score Weight
Payment History35%
Credit Utilization30%
Credit Age15%
Different Types of Credit10%
Number of Inquiries10%
Source: https://www.myfico.com/credit-education/whats-in-your-credit-score

The most important to your credit score and creditors is your ability to pay your debts on time. Followed by that the amount of money you owe versus how high your maximum spending power is. Another way to look at credit utilization is if you have a balance of $2,500 on a credit card with a limit of $10,000, you have used 25 percent of your available credit.

Now that you know more about your FICO score, what about your FICO auto score?

What is the FICO auto score?

Believe it or not, the credit score you see when you check your credit may not be the same credit score that potential lenders see when they are deciding whether or not to approve you for an auto loan. So what exactly is the FICO auto score?

To determine your FICO auto score, FICO will first calculate your “base” FICO score, which is the more traditional score that you are used to. Next, FICO adjusts this calculation based on certain industry specific risk behaviors — and this creates a more tailored FICO auto score. In other words, these scores will help lenders better predict the likelihood that you will make your car payments as promised. FICO auto scores range from 250 to 900 points.

What’s more, different credit bureaus may look at different versions of the FICO auto score. Confused yet? Let’s break it down below:

Score version used by credit score provider
Description: Different credit score providers (including bureaus) and their minimum and maximum ranges that can be attained by consumers.

Credit Score CompanyExperianEquifaxTransunion
FICO Auto Score 9XXX
FICO Auto Score 8XXX
FICO Auto Score 5X
FICO Auto Score 4X
Source: https://www.myfico.com/credit-education/whats-in-your-credit-score

As you can see above, all 3 credit bureaus use both the FICO Auto Score 9 and FICO Auto Score 8. Only Equifax uses FICO Auto Score 5, and only TransUnion uses FICO Auto Score 4.

Now that you know how your credit score is calculated, and the different versions of your credit score that may be used for your auto loan, let’s take a closer look at what you can expect for an interest rate.

Average auto loan interest rate by credit score

Now that you have a better idea of what credit score you need to qualify for an auto loan, let’s see how the average interest rates compare for new and used cars, based on your current credit score.

Average APR for Used and New Cars in 2017


Credit ScoreAverage APR for a New CarAverage APR for a Used Car
Bad (550<)15.24%14.03%
Poor (600+)14.06%12.96%
Fair (650+)9.72%8.53%
Good (700+)7.02%5.99%
Very Good (750+)4.95%3.88%
Excellent (800+)3.60%2.83%
Source: Credit Sesame followed 600 Members in 2017 documenting the quoted rates for automobile financing and purchasing decisions and were divided by FICO Credit Score Ranking. The poll was conducted from January 2017 until December of 2017.

It comes as no surprise that the average interest rate for both new and used cars increases sharply as credit scores decline. For instance, with excellent credit (a credit score of 800 or higher) you could expect to pay 3.6 percent interest on a new car loan. By contrast, if you have bad credit (a credit score of 550 or lower), you can expect to pay nearly 15.25% in interest charges.

Also not surprisingly, interest rates for used cars were lower than their new car counterparts, across the board. Which is good news if you are trying to save money or if your credit is less than stellar — giving you more options for your purchase.

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How to improve your credit score before purchasing a car

If you’re not happy with your score and the position it puts you in when financing a car, here are some quick steps you can take to improve your score:

  • Make all of your payments on time. As we mentioned, your payment history is the single biggest contributing factor to your credit score. Always make all of your payments on time, and you’re well on your way to a good credit score.
  • Lower your credit utilization. One of the best ways to see the biggest and fastest changes to your credit score is to lower your credit utilization. Pay off or pay down any balances that you can. If you are unable to do this, requesting an increase in your credit lines can also have the same effect.
  • Add an authorized user. Adding an authorized user with a well established and good credit history can also go a long way to improving your credit. By having this user associated with their account, you are essentially “borrowing” on their good credit history to improve your own.

Add an authorized user. Adding an authorized user with a well established and good credit history can also go a long way to improving your credit. By having this user associated with their account, you are essentially “borrowing” on their good credit history to improve your own.

How River Financed His New Car Without a Credit History

Member Since: 10/11/2016

We interviewed River on December 2, 2017 ; he earns $37,000 a year is 23 years old and lives in Kansas City, Missouri . He is single and doesn’t have kids and is currently working as a sous chef.
Did you know the credit requirements before applying for your car loan?
Yes and no. I knew I would be able to get a better interest rate and was more likely to be approved for a loan if I had credit, but I didn’t know how much history I needed. I hadn’t given my credit much thought until I moved out of my mom’s house and needed a car to get to work.
Were you able to purchase a car without an established credit history?
Yes, but it took longer than I had hoped. I was able to build a little bit of a credit history when I got my car because I had asked my landlord to submit my timely rent payments to the credit reporting companies.
How did you do it?
I got a secured credit card and paid off the fees. I kept a balance but less than ten percent. My landlord continued to submit my information to the credit reporting companies and I took the bus for nearly six months while I shopped around for a dealership who would work with me without charging me double in interest rates. Eventually, I found a national dealership that was hosting a College Days event and talked with the manager about my situation.

The dealership worked it out that I could finance my vehicle for 8.33% for 60 months with a 25% deposit. Luckily, I’d been saving since high school and wrote them a check for the deposit then and there.
What would you suggest for someone who’s trying to do the same thing?
Try to establish credit and save money. It might be inconvenient to use public transportation and bum rides off coworkers, but buying a car at a Buy Here Pay Here lot will cost you twice what the car is worth.

I’ve learned a lot through this process and the most important thing you can do is have a healthy and established credit rating.

River’s story is important because it shows the benefits to thinking outside of the box when it comes to qualifying for auto financing. Don’t think that just because you don’t have a certain credit score or because you’re just starting out with building your credit that you can’t purchase a new car.

Benefits of learning about auto loan score requirements

Understanding the loan requirements can give you great insight into your ability to finance a car before you apply for any financing. If you know the requirements, you can take steps to improve your credit, if necessary. Or, if you know that you don’t meet a particular lender’s requirements, you can go somewhere else or make alternative arrangements, like getting a co-signer.

TLDR; what credit score is required for an auto loan?

In conclusion, there are no specific set requirements when it comes to the credit requirements needed to purchase a car. Each lender has different requirements, and you have a number of different credit scores that your lender may look at. It’s important to do all that you can to make sure your credit is in the best shape possible before purchasing a new car. By doing a little bit of due diligence now, you’ll be well on your way to buying the car of your dreams.

You can trust that we maintain strict editorial integrity in our writing and assessments; however, we receive compensation when you click on links to products from our partners and get approved.
Published February 19, 2019 Updated: April 30, 2019
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