Why Your Credit Score Is Important in Car Loans

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Content Manager

Bethany Hickey is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 

, Content Manager - June 23, 2021

If you have the income needed to repay an auto loan, why does your credit score matter to the lender? Here’s what your credit score can say about you and why lenders hold it to such high regard in vehicle financing.

Credit Scores Matter to Auto Lenders

An auto lender’s primary reason for checking your credit score and reports is to gauge your ability to repay borrowed money. A good credit score is like a supporting document – proof that you’re able to repay loans, manage your bills, and pay everyone on time.

If you apply for an auto loan with a long-standing credit history of on-time payments, low credit card balances, multiple installment loans like car loans and mortgages, you’re likely to be viewed favorably by an auto lender.

Most lenders use the FICO credit scoring model, it's the most widely used in the world of auto financing, running from 300 to 850. The higher you are on the scale, the better off you're likely to be in the world of credit. Your credit score serves as a snapshot of your credit history, like a grade.

If your credit score is on the lower end of the scale, then it can make getting approved for vehicle financing tough. Multiple missed or late payments, accounts in collections, or even a record of vehicle repossession, can lower your credit score and possibly hurt your ability to take on future credit.

Can I Get a Car Loan With Poor Credit?

It is possible to get an auto loan with bad credit, but it may also depend on what caused that poor credit score in the first place.

There can be many different causes of poor credit, including:

  • Lack of credit history
  • Missed or late payments on loans
  • High credit card balances
  • Bankruptcy
  • Repossession
  • Accounts in collections

There are bad credit auto lenders out there – you just have to know where to look to choose the right one for your credit situation.

No Credit? – If you’re a new borrower, you may want to seek out a subprime lender signed up with a special finance dealership or a member-owned credit union that you belong to for a higher chance of qualifying. Credit unions tend to be more lenient with credit score requirements, and subprime lenders often have first-time car buyer programs for those just starting out.

Bad Credit? – Bad credit borrowers with multiple missed/late payments or other negative marks on their credit reports may need to seek out in-house financing at buy here pay here (BHPH) dealerships, or subprime lenders. BHPH dealers often skip the credit check altogether, making your income and down payment size the biggest factors of eligibility even if you have serious negative marks. Subprime lenders and BHPH dealers alike can assist in many unique credit situations such as bankruptcy, habitual and situational bad credit, and sometimes past repossession.

Need Help With Bad Credit Vehicle Financing?

Many traditional auto lenders have their own standards for what your credit score needs to be in order to qualify for a loan. Typically, borrowers with credit scores below 660 can struggle to meet a traditional lender’s benchmark – and sometimes it may not matter how or why your credit score got to be poor.

Bad credit auto lenders, however, often have the ability to move past a poor credit score by requiring you to bring other documents and proof that you’re able to repay a car loan. They’re not always easy to find, though. We want to help with that!

CarsDirect has created a nationwide network of special finance dealerships, so get started on your path to an auto loan with us today! Finding a dealership with special financing connections can be as easy as completing our free auto loan request form. We’ll do the hard work of locating a dealer in your local area that’s able to assist with credit challenges.


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, Content Manager

Bethany Hickey is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 

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