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You might be in the market for a new set of wheels. Or maybe you know someone who is.
If so, you may be wondering “What’s a good credit score to buy a car?”
The simple answer is that there is not a general cutoff for the credit score you need to qualify for a car loan. It’s possible to buy a car with a range of credit scores.
The bigger takeaway is this: the higher your credit score is, the more favorable terms you could get on your auto loan.
When asking what credit score is needed to buy a car, it’s important to understand how auto lenders could assess your creditworthiness. They may consider one of several scoring models to make that determination.
According to Experian, one of the nation’s leading credit reporting firms, auto lenders might refer to one of the following:
FICO scores assign values to the information included in your credit report. Regarded by many lenders and financial institutions as a measure of a consumer’s creditworthiness, FICO scores range from 300 to 850 and are tiered as follows:
Because they are looked upon as a measure of a borrower’s creditworthiness, the higher the FICO score you achieve, the more favorable the terms you can expect when borrowing. A higher credit score typically earns you lower interest rates than a lower credit score would earn.
With that said, lenders may consider more than your credit score when determining your interest rate on an auto loan. Here are other factors they typically consider:
Remember the question isn’t necessarily “What credit score do you need to buy a car?” as there’s no formal cutoff. Instead, think of your credit score as just one of several factors that lenders will assess when determining your interest rate. Generally speaking, the higher your credit score, the more likely you are to get favorable terms on your auto loan.
This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.