Buying a new car is always daunting. You want to get a good deal and not get swindled. You also want a quality car that has no problems. There are simply a lot of things to juggle mentally when you are making such a significant buying decision. Amongst the biggest questions we have during car purchases is to what extent of a factor does credit and our credit score play. Let’s clear that up for you and take a look at some of the most common questions when it comes to the relationship between a credit score and buying a car.
What credit score do car dealerships use?
If you are looking to buy a car, you should definitely take a look at your credit score before heading to the dealership so you have an idea about your creditworthiness. However, auto dealerships don’t always see the same credit score you do for yourself. This is because car dealerships use the FICO Auto Credit Score, which is a credit score that ranges from 250 to 900. In comparison, the traditional credit score only measures from a range of 300 to 850. Car dealerships use the FICO Auto Credit Score because it takes more into account the possibilities of you defaulting on any loan they approve.
Do you need good credit to buy a car?
Contrary to public opinion, you actually don’t need good credit to buy a car. Good credit is technically known as any credit score 700 or higher. However, there are a variety of different car loan rates for different ranges of credit scores; the better your credit score, the better the terms of your loans will be! Look below for some of these credit ranges that get approved for car loans:
- Super Prime Loans: for credit scores from 781 to 850
- Prime Loans: for credit scores from 661 to 780
- Nonprime loans: for credit scores from 601 to 660
- Subprime loans: for credit scores from 501 to 600
- Deep subprime loans: for credit scores from 300 to 500
What credit bureau do car dealers use?
The credit bureau that car dealerships use is called FICO. FICO is an abbreviation that stands for the Fair Isaac Corporation. This is also the reason they use the FICO Auto Credit Score.
Hopefully, these questions help make it easier for you to understand the impact that your credit score has the next time you buy a car. If you want further clarification or answers to questions like “What credit report do car dealers use?” or “Do you need good credit to buy a car?”, please give us a call here at Color My Credit and we would be happy to help you!