Is 674 a Good Credit Score to Buy a Car?

When buying a car, understanding how your credit score influences financing options is important. This article clarifies the implications of a 674 credit score for car purchases, outlining its impact on loan offers and the steps to navigate the application process effectively.

Understanding Your 674 Credit Score for Car Loans

A credit score of 674 generally falls within the “Good” range for FICO scores (670-739). For VantageScore models, a score of 661 or higher is often considered prime. While not “Excellent” or “Superprime,” a 674 score is above the “Subprime” and “Nonprime” categories, indicating creditworthiness to lenders.

This score suggests a history of responsible credit management, making it a solid foundation for securing car loan options. Lenders often have varying criteria, but a 674 score is typically viewed favorably, allowing access to a wider range of loan products compared to lower scores. It positions a borrower to qualify for financing opportunities, though the most competitive rates are generally reserved for those with higher scores.

How Credit Scores Influence Car Loan Offers

Your credit score impacts the terms of a car loan, primarily influencing the annual percentage rate (APR). A higher credit score generally leads to a lower APR, which reduces the total cost of borrowing. With a 674 credit score, you can expect to receive competitive interest rates, though they may not be the lowest available to borrowers with excellent credit.

For instance, in the first quarter of 2025, borrowers with prime credit (661-780 VantageScore) received average new car loan APRs of about 6.70% and used car loan APRs of around 9.06%. Lenders also consider other financial metrics beyond the credit score, such as your debt-to-income (DTI) ratio, which compares your monthly debt payments to your gross monthly income. A lower DTI, typically below 36% to 43%, indicates a healthier financial situation, though some auto lenders may accept up to 50%. The loan-to-value (LTV) ratio, calculated by dividing the loan amount by the vehicle’s actual cash value, also plays a role, with lower LTVs indicating less risk to the lender and potentially better terms.

Steps to Take Before Applying for a Car Loan

Before applying for a car loan, review your credit report for accuracy. Discrepancies or errors on your report could negatively affect your score and loan terms. Understanding your full credit profile allows you to address any issues proactively.

Establishing a realistic budget for your car purchase is also essential, considering the total vehicle cost and the affordability of monthly payments. A larger down payment can reduce the loan amount, which may lead to more favorable interest rates and lower monthly obligations. Seeking pre-approval from multiple lenders, such as banks and credit unions, before visiting a dealership can provide a clear understanding of potential interest rates and loan amounts. This step strengthens your negotiating position at the dealership, as you will have a concrete offer in hand. Lenders require information like income details, employment history, and residence information for pre-approval.

Navigating the Car Loan Application Process

After completing preparations, submit a loan application. This can be done through banks, credit unions, or at the dealership. For the application, you will need to provide a valid driver’s license or photo identification.

Lenders require proof of income and employment, which can include recent pay stubs, W-2 forms, or tax returns. Proof of residency, such as a utility bill or bank statement, and proof of insurance for the vehicle are also required. After submission, the lender will review your application, which includes pulling your credit report, to make a lending decision. Upon receiving loan offers, compare the APR, loan term, and total cost of each to select the most suitable option before finalizing the purchase.