What is a Good Credit Score for a Car Loan?

There's no magic number for car loan approval, but a higher score gets you better rates. Here's what you need to know.

Credit score basics for car loans

No minimum score is required to get an auto loan. Each lender sets their own standards. But your chances improve significantly at certain thresholds:

• Prime score (661+ VantageScore or 670+ FICO): Opens doors to better rates and terms

• Lower scores: You can still get approved, but expect higher interest rates

Lenders may use different types of scores - regular FICO Scores, VantageScore, or auto-specific FICO Scores. They all use a similar 300-850 range but might evaluate your credit differently.

How to build credit before car shopping

If you can wait a few months before buying, these steps can improve your score:

• Pay every bill on time. Late payments seriously hurt your score.

• Pay down credit card balances. Lower utilization can quickly boost your score.

• Keep old credit cards open. Closing cards can hurt your utilization ratio.

• Deal with collections. Paying or settling collections might help your score.

• Fix credit report errors. Check for mistakes and dispute them.

• Get added as an authorized user on someone else's well-managed card.

• Hold off on other loan applications until after your car purchase.

KOHO can help boost your credit before car shopping

KOHO users see their credit scores go up by 22 points on average after just 3 months.* Unlike traditional credit cards that might tempt you to spend more, Credit Builder offers a different approach to improving your credit.

The process is simple: KOHO opens a line of credit separate from your balance. Each month, they set aside a small amount from this line and report it as an on-time payment to Equifax. These consistent payments help build positive credit history without the risks of traditional credit cards.

A better credit score doesn't just look good on paper—it saves you real money. For example, on a $15,000 loan with 12 monthly payments, good credit could save you nearly $3,000 in interest.

What makes KOHO Credit Builder worth considering:

• No credit check required

• Guaranteed approval

• No security deposit needed

• Access to financial coaches who can guide your credit journey

• Ability to track your Equifax credit score directly in the app

To get started, just open the KOHO app and tap Credit > Subscribe to Credit Building.

*Credit scores are based on complex models involving a variety of factors. Consistent on-time payments help improve scores. Missed or late payments may cause credit scores to decrease. Outcomes may vary among users.

Getting a car loan with bad credit

Bad credit doesn't mean you can't get a car loan, but it will cost more. Try these approaches:

• Check your credit report first so you know where you stand

• Get prequalified with several lenders to compare offers

• Save for a bigger down payment to reduce your loan amount

• Ask someone with good credit to cosign if possible

Avoid "buy here, pay here" dealerships if you can. They're usually the most expensive option and might not report your payments to credit bureaus.

Steps to apply for a car loan

1. Check your credit score to understand your approval chances

2. Shop different lenders - rates and terms vary widely between banks, credit unions, online lenders and dealers

3. Save for a down payment or prepare to trade in your current vehicle

4. Get preapproved before visiting dealers - this gives you negotiating power and protects you from dealer markup

Remember that multiple car loan applications within a 14-45 day period typically count as just one inquiry on your credit report, so don't be afraid to shop around for the best rate.

What this means for your car purchase

Your credit score significantly affects how much your car will ultimately cost. Even a small interest rate difference adds up to hundreds or thousands of dollars over the loan term.

If your score needs work and you're not in a rush, consider improving your credit before applying. But if you need a car now, comparing multiple lenders is your best strategy for finding decent terms regardless of your score.