What Is a Good Car Loan Credit Score?

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Automotive Content Editor

Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.

, Automotive Content Editor - December 23, 2019

When you need a car loan, a good credit score (typically defined as a credit score of 661 and above) definitely makes the process go more smoothly. But is a good score necessary in order to get an auto loan? Credit scores range from bad to excellent, and there are lenders available to get you a car loan in almost every credit situation. All you need to know is a little bit about your own credit situation, and which type of lender is best equipped to handle it.

Determining Your Credit Score Range

Credit scores help lenders determine the risk involved in lending to borrowers. There are typically five categories you could fall under which determine the type of lender you’re mostly likely to need. These categories also help to determine other loan terms, such as the interest rate you’re likely to qualify for.

The five basic credit scoring categories, according to Experian, are:

  • Super prime – FICO credit scores from 781 to 850
  • Prime – FICO credit scores from 661 to 780
  • Nonprime – FICO credit scores from 601 to 660
  • Subprime – FICO credit scores from 501 to 600
  • Deep subprime – FICO credit scores from 300 to 500

Knowing your credit score, you can see where you fall within the credit categories. If you don’t know your credit score, there are many ways you can get it, sometimes for free. Credit scores are far from the only thing that determines the type of loan you’re eligible for, but they’re typically the first thing a lender takes into consideration.

Lender Options Based on Credit Score Range

Scores in the prime or super prime ranges are considered good to excellent, and these borrowers should have no problem qualifying for an auto loan from a traditional lender. Traditional lenders can be direct lenders, such as banks, credit unions, and online lenders, or they can be indirect lenders that work through dealerships.

Nonprime credit scores are considered fair. If you fall into this range, you may qualify with some traditional lenders, most likely through a bank or credit union you belong to, as long as you have a positive relationship with them.

On the other hand, depending on your situation, you may only qualify for a car loan through lenders that work with people in a wider range of credit issues, such as subprime lenders.

Subprime lenders typically work with people whose credit scores fall into the subprime range, and, depending on the lender and your credit, possibly the upper end of the deep subprime range.

Occasionally, people with credit scores on the higher side of the subprime range may qualify for an auto loan through a direct lender such as a bank or credit union they belong to, or an indirect captive lender like Kia Motors Finance or Ford Motor Credit. Generally, however, you’re going to need a subprime lender if you fall into this category, and they only work indirectly through special finance dealers.

If your credit score falls into the deep subprime category, you might be considered through a subprime lender, but it may be more difficult to get approved. In this case, you’re not out of options to get a car loan, though you may need to turn to a less credit-based solution like a buy here pay here dealership.

Credit Score Not Good?

No matter where your credit score falls, you typically have options for auto financing. The better your credit score, the better your options, and the lower your interest rate is likely to be. On the other hand, a lower credit score means you’re going to have to meet more requirements in order to qualify for lending.

The good news is that credit scores can always be improved. There are many simple ways to begin improving your credit score and qualify for a better car loan. To see which method of credit building is best for you, first get a copy of your credit reports, which you can do for free every 12 months at www.annualcreditreport.com. It’s a good idea to get your credit reports and credit score at the same time, before you begin searching for auto financing.

Here are a few examples of ways to begin improving your credit score right now:

  • Add positive credit information – One of the fastest ways to add positive credit information to your credit reports and help boost your score is by paying all your bills on time, every time. When you begin to do this, it adds to your payment history, which is the biggest factor in determining your credit score. You can also add positive credit information to your credit reports by having utilities or rent payments – which are typically not reported – added to your reports. Try asking a landlord or utility company if they can report your payments to the national credit bureaus, or sign up for a service that does it for you.
  • Correct errors on your credit reports – When you get your credit reports, make sure you look them over carefully. Any incorrect negative marks or negative listings that should have already come off your reports should be disputed to the appropriate credit bureau(s). Just having these marks erased can make an improvement in your score.

Of course, there are many other ways you can improve your credit score, and one of them is with a bad credit car loan.

Get a Bad Credit Auto Loan

When you don’t have good credit, you’re not out of options for an auto loan. In fact, getting financed can even help you build up your credit. After successfully completing a subprime car loan, you may have a credit score good enough to qualify for an even better loan the next time you need one.

First, you need to take steps to get that subprime auto loan so you can get a vehicle and start improving your credit. Here are CarsDirect, we work with a nationwide network of special finance dealers that have subprime lending connections.

To get started toward a bad credit car loan today, simply fill out our auto loan request form and we’ll get to work matching you with a local dealership. The process is totally free, and there’s never any obligation to buy.


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, Automotive Content Editor

Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.

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