What Credit Score You Need to Get a Car Loan

Most car lenders want a credit score of 620 or higher, but the actual requirement depends on the lender and the type of loan

There is no single credit score that every lender uses. Traditional banks often require scores between 660 and 700. Credit unions may accept scores as low as 580 to 620. Subprime lenders — who specialize in lending to people with lower scores — may work with scores below 580, though they charge much higher interest rates. The score that matters most is your FICO score, which is what most auto lenders pull when you apply.

Your score is only one piece of what a lender looks at. They also examine your income, employment history, existing debts, and whether you have made recent late payments. A score of 650 with steady income and no recent missed payments will get you better terms than a score of 700 with a recent default or unstable work history. The interest rate you receive — if you receive one — reflects all of these factors combined.

Key Takeaways

• Credit scores of 620 and above open access to traditional lenders, though 660 to 700 is more common for better rates.
• Credit unions often have lower score requirements than banks and may offer better rates even with a lower score.
• Recent late payments, high existing debt, and unstable income can disqualify you even with a decent score.
• Subprime lenders will work with scores below 580 but charge significantly higher interest rates and fees.
• You can request your credit report for free once per year from each of the three major bureaus to check for errors before applying.

How lenders use your credit score

When you apply for a car loan, the lender pulls your credit report and calculates your FICO score. This score ranges from 300 to 850 and is based on five factors: payment history (35 percent), amounts owed (30 percent), length of credit history (15 percent), credit mix (10 percent), and new credit inquiries (10 percent). A lender uses this number as a quick way to estimate how likely you are to repay the loan on time.

The score itself is not a pass-or-fail gate. Instead, it determines which lenders will consider you and what interest rate they will offer. A score of 750 might get you 4 percent interest from a bank. A score of 620 might get you 8 percent from a credit union or 12 percent from a subprime lender. The difference in monthly payment can be hundreds of dollars over the life of the loan.

Lenders also look at your credit report itself, not just the number. They want to see that you have paid bills on time, that you do not have too many recent inquiries (which suggest you are desperate for credit), and that you do not have collections accounts or recent defaults. A single late payment from two years ago is less damaging than one from two months ago.

What happens if your score is below 620

If your score is below 620, most traditional banks will not lend to you. Credit unions are often more flexible and may work with scores in the 580 to 620 range, especially if you have a relationship with them or a co-signer. Subprime lenders will work with scores below 580, but the cost is steep: interest rates often range from 10 to 20 percent, and some lenders add fees for origination, documentation, or early payment.

You have other options before accepting a subprime loan. You can add a co-signer with better credit, which allows the lender to consider their score and income alongside yours. You can wait three to six months while you pay down existing debt or let recent late payments age — the older a negative mark, the less it damages your score. You can also buy a used car for less money, which reduces the loan amount and makes you less risky to lenders.

How to check your credit before applying

You can request a free copy of your credit report once per year from each of the three major bureaus: Equifax, Experian, and TransUnion. Visit annualcreditreport.com, which is the official site run by the three bureaus. You will need to provide your name, address, Social Security number, and date of birth. You can request all three reports at once or stagger them throughout the year.

Your credit report shows every account in your name, payment history for each one, and any collections or public records. It does not include your credit score — you have to pay for that separately, or some credit card companies and banks offer free score estimates. Check the report for errors: accounts you do not recognize, late payments you did not make, or accounts listed as open that you closed. If you find an error, contact the bureau in writing and ask them to investigate.

Checking your own credit report does not hurt your score. Only hard inquiries — when a lender pulls your report because you applied for credit — lower your score slightly. Soft inquiries, like when you check your own report or a company checks to see if they want to send you an offer, do not affect your score.

The difference between credit unions and banks

Credit unions are member-owned nonprofits, while banks are for-profit companies. This difference shows up in car lending: credit unions often have lower score requirements and lower interest rates, even for people with fair credit. A credit union might approve a 600 score that a bank would reject, and offer 6 percent interest instead of 10 percent.

To join a credit union, you usually have to meet a membership requirement — living in a certain area, working for a certain employer, or belonging to a certain organization. Some credit unions have broad membership, while others are very specific. If you already belong to one through your employer or community, ask about their auto loan terms before you apply to a bank. If you do not belong to one, you can search for credit unions in your area at creditunion.coop.

What to do if you have recent late payments

A late payment from the last 30 days is much more damaging than one from a year ago. If you have a recent late payment, your options are limited. Most lenders will not work with you until at least 60 to 90 days have passed since the late payment. Some require six months to a year of on-time payments before they will consider you.

If you need a car now, a co-signer can help. A co-signer is someone with better credit who agrees to repay the loan if you do not. The lender considers their credit score and income, not just yours. This usually lowers the interest rate and increases your chances of approval. The co-signer is legally responsible for the debt, so choose someone you trust and who understands the commitment.

Another option is to wait. Every month that passes without a late payment improves your score. After six months of on-time payments, your score typically rises 20 to 50 points. After a year, the improvement is more significant. If you can delay the car purchase, waiting is often cheaper than accepting a high interest rate.

How much your score affects your interest rate

The relationship between credit score and interest rate is not linear — a score of 700 does not get you twice the rate of a score of 750. Instead, lenders group scores into bands, and each band has its own rate. A bank might offer 4 percent for scores 750 and above, 5.5 percent for 700 to 749, 7 percent for 660 to 699, and 9 percent for 620 to 659. Below 620, they do not lend at all.

The difference between bands can be substantial. On a $25,000 loan over 60 months, the difference between 5 percent and 9 percent is about $2,000 in total interest. This is why improving your score before you apply can save you real money. Even a 20-point improvement might move you into a lower rate band.

Frequently Asked Questions

Can I get a car loan with a credit score of 580?

Yes, but only from subprime lenders, who charge much higher interest rates — often 12 to 20 percent. Credit unions may work with scores in the 580 to 620 range if you have a relationship with them or a co-signer. Traditional banks will not lend at this score.

Does applying for a car loan hurt my credit score?

Yes, but only slightly. When a lender pulls your credit report, it counts as a hard inquiry and lowers your score by a few points. Multiple inquiries within a short period (usually two weeks) count as one inquiry, so you can shop around without extra damage.

What is a co-signer and do I need one?

A co-signer is someone with better credit who agrees to repay the loan if you do not. You need one only if you cannot get approved on your own or want a lower interest rate. The co-signer is legally responsible for the debt.

How long does a late payment stay on my credit report?

A late payment stays on your report for seven years, but its impact decreases over time. A late payment from six months ago damages your score much less than one from last month. After two years, most lenders treat it as less serious.

Should I check my credit score before applying for a car loan?

Yes. Checking your own credit report is free and does not hurt your score. Knowing your score helps you target lenders who work with your credit range and avoid wasting time on applications you will not be approved for.