Credit Score

When it comes to big purchases, credit score is something we constantly worry about. Whether you are starting to build your credit score or you have not made all your payments in time, these could possibly affect whether you could finance a car or not. Most people don’t realize how much a credit score determines when buying a car; the interest rate, monthly payment amount and your loan terms. We are here to give you the run down on credit score and even include some tips when it comes to getting approval to finance a car.

What is credit score?

Every person has a three-digit number which is determined by how you repay debt, this is called credit score. Lenders, banks, and in this case dealerships use these scores to approve a person for a loan or financing. Your score is not based on any personal information, just specifically on making on-time payments and your accounts being in good standing. Credit is not always an indicator of your financial standing, but it could mean you have a lot of borrowed money to pay on consistently.

Not only does your credit score determine your loan approval, but it also will determine your interest rate. The higher the credit score, the lower interest rate you will typically be charged. Make sure to keep building your score, especially before a financed purchase, because every lender has a different standard. Something most people do not know is you are more likely to get approved and get a better interest rate through a car dealership than a bank, so keep this in mind when you are buying a car. 

What does my credit score need to be to purchase a vehicle?

Overall a good credit score is considered 720 or higher. When it comes to buying a car many people underestimate how much car dealers really want to sell a car to you. This does not mean everyone will get approved, but your chances are higher than you think if your score is below 700. 

Another important unit to calculate is your credit utilization, also known as the percentage of available credit being used at the current time. For example, if you have 5 credit cards with $10,000 limits, your available line of credit is $50,000. If you owe $46,000 then lenders will be concerned you are tapped out because your utilization is 92%, and you only have 8% available. If you owe $10,000 then your available credit is 80% because you’re only utilizing 20%. This is another important factor to evaluate along with your credit score. 

Don’t stress if you have a low credit score because it’s possible you can still get approved! If you have a credit score under the needed level, you could always consider having a co-signer. If you have someone who is willing, a person with a higher credit score can co-sign onto the loan to help you get approved. If this is not an option for you, dealers and lenders can always work with you to find other potential lenders who might approve a loan based on your credit history. 

I’m looking into buying a car, but just learned about credit score, now what?

If you have a credit card, then you can typically find your credit report by logging onto your account. If you do not have a credit card or are struggling to find your credit score you can also visit sites such as or to check your credit score for free without affecting your score. Knowing your score can help you have an idea of how easy the loan process might or might not be for you. 

If you are worried about getting approved, work on improving your credit before you start shopping. Also it’s easier to get approved for a pre-owned car than a new one so keep that in mind. Remember the longer you have your credit history the better, especially if you are making good payments on it. Work on paying your bills on time, don’t apply for any other credit, and keep old credit cards open instead of closing them. Discipline yourself to spend less than you make instead of accumulating debt on your credit cards. 

If you have already signed a loan to buy a car, then keep improving your credit and watch your scores. If the loan is high-rate and you have made all your payments on time, then after 6-12 months you might be able to refinance the loan for a lower interest rate. 

As long as you have a credit score you have a chance to get approved, so always make sure you try through both the dealership and your bank. If you do not get approved you can use these tips to build up your score, which could happen quicker than you might think. Don’t let your credit score get you down or keep you from buying a car. There are always ways to improve your score and get an opportunity to buy the car perfect for you!