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What Credit Score Is Needed to Buy a Used Car

By: StaffSeptember 6, 20212 min

By understanding how to read your credit score and spot inaccuracies, you increase your chances of being approved by a lender and receiving a lower interest rate.

The Credit Rating Scale

The FICO credit rate scoring scale ranges from 300 to 850 (The higher your score, the better your chances of being approved for a loan and receiving a lower interest rate). While most Americans have a credit score that falls within the 600 to 800 range, a couple of numbers you want to be aware of include:

720: 720 is the magic number. If your score is 720 or better, you are considered an excellent credit candidate when it comes to buying a car - meaning that you have an improved chance of qualifying for a great rate.

620: Most lenders are wary of credit borrowers with a rating of 620 or lower. While you may still be able to get a car loan, you may be considered a subprime borrower -meaning you incur the chances of only qualifying for a higher interest rate.

How is Your Credit Score Calculated?

According to FICO there are four basic elements used to calculate your credit score. These include:

Payment History = 35%: Your payment history accounts for approximately 35 percent of your entire credit score. While FICO tell us that a few late payments are not automatic "score-killers," this is a large part of the calculation, which means that a history of late payments can negatively affect your score

Amount You Owe = 30%: The second largest factor making up your credit score is the amount of your outstanding debt. It is important to understand that owing a lot of money does not necessarily correlate to a negative credit score. However, if a high percentage of your available credit has been used, this is an indication that you may be overextended and more likely to make late or missed payments.

Credit History = 25%: The length of your credit history, including how long you have been building your credit and the ages of your oldest and newest lines of credit, account for about a quarter of your credit score. For example, if you have recently opened up a number of new credit card accounts, your overall score may be negatively affected.

Type of Credit = 10%: The final part of your credit score equation involves the type of credit you have access to. A good credit score is one that includes a quality mix of installment loans, mortgages, retail accounts, credit card accounts and finance company accounts.

Checking for Inaccuracies

Hopefully, you now understand your credit score and what is needed to buy a used car. It is up to you to check for inaccuracies. This should be done before you even begin the car buying process. By checking your credit score six to twelve months in advance, you have time to contact the reporting credit card bureau and ask for any errors to be corrected. The Fair Credit Reporting Act (FCRA), which promotes the accuracy, fairness, and privacy of information in the files of the nation's credit reporting companies, entitles you to get a copy of your credit report every twelve months from each of the three credit reporting bureaus. You can order this report by visiting

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