Credit Scores Are Going Up: How’s Yours?

Get Car Financing
Even with poor credit.

By

Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


, Contributing Writer - August 23, 2021

Despite the economic turmoil that impacted many borrowers in the last year, credit scores amongst car buyers are going up. If you haven’t seen an increase in your credit score in the last year, it could be because you’re missing out on valuable access to your credit reports to get you moving in the right direction.

Car Buyer Credit Scores Are Up

According to Experian’s latest State of the Auto Finance Market report in the second quarter of 2021, consumer’s credit scores have gone up since this time last year.

Among new car shoppers, the average credit score is up by three points, and the average used car shopper’s credit score is up by 10 points since the second quarter of 2020. As a result, less and less borrowers are in need of bad credit lending resources, and in the last year, the amount of subprime car loans issued has gone down.

However, just because the average credit score is up and subprime auto loans are in less demand doesn’t mean everyone has experienced this good fortune.

Experian estimates that around 16% of borrowers have a credit score below 579, and 18% have a credit score between 580 and 669. If your credit score is below the 670 mark, you’re likely to be called a poor credit borrower, and may struggle to get your hands on a car loan. That’s approximately 34% of the population that may need the assistance of a subprime auto lender to get vehicle financing.

Whether you’re in need of bad credit auto lending resources, or you want a boost in your credit score before you apply for a car loan, we’ve got some guidance.

Join the Good-Credit Club: Tips for Credit Repair

The first step in fixing something is identifying the problem. In terms of credit repair, this means requesting your credit reports so you can see your credit issues first hand, and it also gives you the chance to see what lenders see when you apply for new credit.

The national credit bureaus – TransUnion, Experian, and Equifax – have all agreed to open up access to everyone’s credit reports in light of the pandemic. Normally, you’re allowed one, free copy of all three of your credit reports every 12 months. Right now, though, you’re allowed a free copy of each of your credit reports every week until April 2022. You can visit www.annualcreditreport.com to request your copies for free.

Do you have little to nothing activity being reported? Has it been years since you’ve taken on any credit? How many missed or late payments are lingering on your credit reports? Have you gone through bankruptcy recently, or had a vehicle repossession in the last 12 months?

If you answered yes to any of the above, then it’s time to take action.

5 Credit Repair Tips

1. Consider a credit reporting service

Chances are, you’re paying for something each month. Whether that’s your electric bill, phone bill, or even a streaming video service, it could help you boost your credit score. Credit reporting services, such as Experian Boost, allow borrowers to add their existing bills to their credit reports and start earning positive payment history from those accounts.

2. Consider a credit-builder loan

These loans are typically aimed at borrowers with credit challenges and are short-term, small loans. A credit-builder loan is a specific program where you borrow a small amount of cash from a direct lender, and that money is placed in an account. You make monthly installment payments until you’ve paid everything, and once you’ve completed the loan, you get the money. The positive payment history from these loans can improve your credit, as well as help you build some savings.

3. Consider a secured credit card

Credit cards can be secured or unsecured. A secured credit card is when the borrower makes a security deposit when opening the account. If you take on a secured credit card, your security deposit typically sets your borrowing limit, and if you’re unable to pay the card balance, your security deposit is used to cover the balance.

Since secured credit cards are less risky to a lender, bad credit borrowers often have an easier time getting a secured credit card over an unsecured one. Secured credit cards are reported the same as unsecured ones, so having it on your credit reports and the positive payment history to go along with it can improve your credit score.

4. Consider a subprime car loan

Many borrowers start off their credit history with a small credit card or an auto loan. If you’re in need of a vehicle, then taking on a subprime car loan could be the way you get transportation and build credit history at the same time.

Subprime lenders typically have first-time car buyer programs, work with bankruptcy borrowers, and can assist with situational bad credit (such as a lower credit score as the result of a job loss or other financial strife). They’re signed up with special finance dealerships, and you can read more about the requirements of a subprime auto loan here.

5. Pay everything on-time

It sounds too good to be true, but the reality is that paying all your bills on time is one of the best things you can do to improve your credit score. Payment history makes up 35% of your credit score, so if you let some bills slip through, it can damage your credit score for up to seven years.

Ready to Start Repairing Your Credit With a Car Loan?

Gotta break some eggs to make an omelet – and for many borrowers, you have to take on new credit to repair a tarnished credit history. If you don’t have anything contributing to your credit reports, it’s likely to lead to a poor credit score.

If you’re ready to get back on the road and build some credit history, then let us help you out at CarsDirect. We’ve created a coast-to-coast network of special finance dealerships that assist borrowers with credit challenges. Complete our free car loan request form, and we’ll look for a dealer in your local area for free with no obligation.

$1 Credit Report

Get your credit score now!
Get a copy of your most recent credit report too.

Get Your Report & Score

Auto Refinance

Refinance your car or truck now. Get a better interest rate and lower payment.

Refinance Your Car

Vehicle Warranty

Protect your vehicle and you could save thousands on auto repairs.

Get a Free Quote

Need a Car Loan?

It only takes a minute.

, Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


Loan approval is not guaranteed and is subject to credit application and approval of the lender. Individual loan terms may vary. Use of this website constitutes acceptance of CarsDirect.com's Terms of Use, Disclaimer, Privacy Policy, and Cookie Policy.

Privacy Policy|Do Not Sell My Personal Information|Terms of Use|Cookie Policy|Disclaimer|
COPYRIGHT 1999-2021 MH Sub I, LLC dba CarsDirect.com