If you’re looking to take out a car loan, you’re probably wondering what credit score you need to get approved. Here’s what you need to know.
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In order to get a car loan, you will need to have a good credit score. A credit score is a number that lenders use to determine how likely you are to repay a loan. The higher your credit score, the more likely you are to be approved for a loan.
A good credit score for a car loan is usually above 660. However, if you have a lower credit score, you may still be able to get a loan by providing a larger down payment or cosigner. If you have bad credit, you may be able to get an auto loan with a subprime lender.
If you’re not sure what your credit score is, you can check it for free on websites like Credit Karma or NerdWallet.
What is a credit score?
Your credit score is a measure of your financial health, and it’s important to know where you stand before you apply for a car loan. Lenders use your credit score to decide whether to give you a loan and how much interest to charge you. A higher score means lower interest rates and easier loan approval; a lower score means the opposite.
Most lenders consider a score of 700 or above to be good. However, keep in mind that credit scores are just one factor in the lending decision, so even if your score is below 700, you may still be approved for a loan.
The different types of credit scores
There are dozens of credit scoring models in existence, but the most common—and the one used by most lenders—is the FICO score. Developed by the Fair Isaac Corporation in 1989, FICO scores are calculated using information from your credit report. The scoring models have since been updated several times, with the latest version—FICO Score 9— debuting in 2014.
Other common credit scoring models include the VantageScore (developed by the three major credit bureaus) and the Experian PLUS Score (developed by Experian). While these scores use similar information as FICO scores, they may produce slightly different results.
Lenders also often develop their own internal scoring models to supplement (or replace) traditional credit scores. These “proprietary” scores are used to make lending decisions but aren’t available to consumers.
It’s important to keep in mind that there is no universal “cutoff” for what is considered a good or bad credit score. What counts as a good score will depend on each lender’s individual standards—and what kind of loan or credit card you’re looking for.
For example, if you’re interested in a rewards credit card with a 0% intro APR period, you’ll likely need a good or excellent score (a FICO score of 670 or higher). But if you’re just looking for a basic, no-frills card, you may be able to get approved with fair or even bad credit (a score below 630).
What is a good credit score?
A good credit score is anything above 700. A score of 700 or higher is considered excellent, and you should have no problem getting a loan with favorable terms. A score between 650 and 700 is considered good, and you may be able to get a loan with slightly higher interest rates. A score below 650 is considered poor, and you may have difficulty getting a loan at all.
How to improve your credit score
Your credit score is one of the most important factors in determining whether or not you will be approved for a car loan. Lenders use your credit score to determine how likely you are to repay your loan on time. The higher your credit score, the lower the interest rate you will be offered on your loan.
If you’re planning on applying for a car loan, there are a few things you can do to improve your chances of getting approved:
-Check your credit report for errors and dispute any incorrect information.
-Pay all of your bills on time, including your rent and utilities.
-Keep your credit card balances low.
-Limit yourself to one or two hard inquiries per year.
In order to get the best interest rate on a car loan, you will need a credit score of 700 or higher. However, it is still possible to get a loan with a credit score of 620 or above. There are many factors that lenders consider when determining interest rates, so your credit score is just one piece of the puzzle.