
Car Dealership Credit Score
When you’re in the market for a new car, you’ll likely require an auto loan to make that dream car a reality. With the average price of a new vehicle now exceeding $47,000, it’s a financial necessity for most buyers in the United States. Whether you’re seeking financing through the dealership or a bank, it’s essential to recognize that the lender will evaluate your creditworthiness as part of the application process. So, what car dealership credit score do you need to secure that car loan, and what steps can you take if your credit isn’t pristine? We’ve got the answers for you.
Understanding Car Dealership Credit Score for Auto Loans

Regarding your creditworthiness, you might be surprised to learn that you don’t have just one car dealership credit score but several. These scores are derived from the same essential information in your credit reports but are calculated using slightly different criteria. The two primary scoring models you’ll encounter are:
- FICO: FICO is the most renowned and widely utilized credit scoring company. FICO Scores range from 300 to 850, providing a comprehensive assessment of creditworthiness.
- VantageScore: A relatively newer competitor to FICO, VantageScore has gained prominence. Its latest version adopts a scoring range identical to FICO, ranging from 300 to 850, making it easier to interpret and compare.
In addition to these primary scoring models, specialized scores are designed for specific purposes. For instance, FICO offers the FICO Auto Score, tailor-made for auto lenders. This unique score applies a distinct weighting system, emphasizing credit utilization while minimizing the impact of isolated late payments, such as a one-time oversight. It’s worth noting that multiple versions of the FICO Auto Score add complexity to the equation.
While many car dealerships rely on FICO Auto Scores, it’s essential to recognize that not all do. If you’re unsure which scoring model your potential lender uses, it’s prudent to inquire before consenting to a credit check. This proactive step ensures transparency and empowers you to understand better how your credit score factors into the loan approval process.
Minimum Credit Score Requirements for Car Loans

When lenders assess your application for an auto loan, they evaluate two primary factors: your income and your credit score. To categorize applicants, lenders utilize a car dealership credit score range, which typically includes:
- Super Prime: Scores between 781 to 850.
- Prime: Scores ranging from 661 to 780.
- Non-prime: Scores within the range of 601 to 660.
- Subprime: Scores from 501 to 600.
- Deep Subprime: Scores falling between 300 to 500.
As a general guideline, most lenders prefer borrowers in the prime range or higher. Therefore, you’ll typically need a credit score of 661 or higher to qualify for most standard car loans. This threshold increases your eligibility for favorable terms and competitive interest rates, making car-buying more accessible and affordable.
Purchasing a Car with a Poor Car Dealership Credit Score

Securing an auto loan can be more challenging and potentially costlier when your credit score falls below the prime range. However, if you find yourself in this situation, there are viable options for financing a car. Here are three avenues to explore when seeking auto financing with fair or poor car dealership credit score.
Prepare for a Higher Interest Rate

Lenders may perceive you as a higher-risk borrower when your credit history carries some blemishes. While securing a car loan is still possible, it’s crucial to understand that you’ll likely face a substantially higher interest rate than those with good car dealership credit score.
For instance, let’s take a look at the interest rate landscape in the second quarter of 2022:
- Prime borrowers securing new car loans enjoyed an average interest rate of 4.03%.
- Non-prime borrowers faced a somewhat steeper rate at 6.57%.
- Deep subprime borrowers encountered a considerably higher rate of 12.84%.
The impact of this higher interest rate on your overall loan cost cannot be underestimated. To illustrate, consider this scenario: If you were to finance $37,000 over four years with a 4.03% interest rate, your monthly payment would be $836, with a total interest payment of $3,124.
However, if you were to secure the same loan amount but qualified for a four-year loan at a 12.84% interest rate, your monthly payment would surge to $990. Over the course of the loan, you’d end up paying a total of $10,505 in interest—a substantial difference of $7,381.
While a higher interest rate is an inevitable consequence of a lower credit score, it’s essential to be financially prepared for the added cost when seeking auto financing.
Consider Specialized Dealerships for Poor Credit

When conventional dealerships prove unyielding due to your credit situation, don’t lose hope. There’s an alternative route—seek out dealerships catering to buyers with poor car dealership credit score histories. Often referred to as “buy here, pay here” dealerships, they offer in-house financing solutions primarily tailored for used vehicles.
It’s worth noting that while these specialized dealerships can provide a lifeline for individuals with poor credit, they do come with a caveat. These dealerships typically impose significantly higher interest rates to mitigate the risk associated with lending to borrowers with lower credit scores.
In essence, while “buy here, pay here” dealerships can be viable when traditional avenues are closed, it’s essential to weigh the cost implications carefully. Higher interest rates are the trade-off for accessibility, so assess your budget and financial capacity before committing to this option.
Explore Co-Signer Options

When your car dealership credit score places you in the non-prime to deep subprime range, seeking a car loan with a co-signer can be brilliant. A co-signer is typically a family member or someone close to you who is willing to apply for the loan alongside you. Ideally, this individual boasts good to excellent credit, which can bolster your application.
A co-signer shares the responsibility for the loan with you, which works to reduce the lender’s perceived risk. This arrangement enhances your chances of loan approval and opens the door to securing a lower interest rate than applying on your own.
However, it’s vital to recognize the weighty responsibility that comes with this arrangement. If, for any reason, you’re unable to meet the loan payments, your co-signer will be held accountable for settling the debt. Therefore, while co-signing can be a valuable lifeline for securing a car loan, it’s crucial to approach it with transparency and an unwavering commitment to meeting your financial obligations to avoid placing your co-signer in a difficult position.
Understanding Credit Scores

Understanding how car dealership credit scores function is important. FICO and similar credit scoring systems consider a range of factors that collectively shape your creditworthiness:
Payment History

This accounts for a significant chunk, 35 percent, of your credit score. Consistently making timely payments for credit cards, loans, and utilities elevates your credit score and prevents late fees. More importantly, it showcases your capability to meet financial obligations reliably and steer clear of potential financial pitfalls, such as defaults or eventual asset repossession.
Understanding Credit Utilization

Another critical component, making up about 30 percent of your credit score, is credit utilization. This factor hinges on the proportion of your available credit that you’re actively using. For many individuals, a significant portion of their available credit typically derives from revolving credit lines, most notably credit cards.
Those with good car dealership credit score tend to keep their credit utilization below 30 percent. Even better scores are associated with lower utilization rates. To put this into perspective, imagine someone with multiple credit cards and a combined available credit limit of $20,000. If they maintain a credit card debt of around $6,000, they’re operating at a 30 percent credit utilization rate.
It’s crucial to note that exceeding this threshold could adversely affect your credit report and subsequently lower your credit score. Higher credit utilization can be detrimental if a lender examines FICO, VantageScore, or CreditVision. The most favorable credit scores typically feature less than 6 percent credit utilization rates.
Calculating your credit utilization is straightforward: divide your outstanding debt by your total available credit. Using the example above, $6,000 divided by $20,000 equates to 0.3, or 30 percent.
The Significance of Credit History Duration

The length of your credit history plays a role of approximately 15 percent in determining your car dealership credit score. In this context, longer credit history is typically more favorable, underscoring the importance of maintaining open credit accounts in many situations. For instance, opting to keep a credit card account open, even when not frequently used, often proves more beneficial than closing the account.
The rationale behind this is twofold. Firstly, closing a credit line tends to diminish the average age of all your accounts, potentially affecting your credit score negatively. Secondly, it can elevate your credit utilization percentage by reducing the total available credit at your disposal. It’s crucial to remember that opening a new account can also impact the average age of your accounts. However, it can have a positive influence on your credit utilization percentage.
Balancing these considerations is vital, as they can directly influence your credit score and overall creditworthiness.
The Impact of New Credit and Credit Mix

A person’s new credit constitutes roughly 10 percent of their credit history. Interestingly, judiciously acquiring new credit from time to time can have positive long-term effects on your car dealership credit score. However, it’s crucial to navigate this aspect cautiously. Understand that multiple credit account applications within a short timeframe may raise red flags among lenders. Such activity can be perceived as a sign of financial instability. This will then potentially cast doubts on one’s ability to repay multiple loans promptly.
Moreover, the composition of your credit mix carries similar weight, contributing about 10 percent to your credit score. A diverse portfolio of credit and other accounts is generally associated with a more favorable score. For instance, someone with a strong credit profile might possess accounts with utility companies, two or three credit cards, and an active car loan. They may also have student debt or a mortgage.
Maintaining a well-balanced credit mix can have a constructive impact on your credit score, underlining the importance of judiciously managing your credit portfolio to bolster your creditworthiness.
Conclusion

Whether you’re in the market for a brand-new vehicle or considering a used one, your car dealership credit score wields considerable influence over your financing possibilities. Hence, it’s prudent to have a clear picture of your credit standing. Fortunately, some credit card companies and online sources offer the convenience of obtaining your credit score at no cost.
However, before embarking on your car-buying journey, it’s advisable to take a strategic approach. This involves obtaining auto loan quotes from one or more banks and credit unions. Doing so serves multiple purposes: it empowers you to pinpoint the most favorable loan terms, provides added negotiation leverage when dealing with the dealership, and aids in establishing a realistic budget for your car purchase.
By taking these proactive steps, you not only ensure you’re well-informed about your car dealership credit score. You can also position yourself for a more informed and advantageous car-buying experience.
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