Is 687 a Good Credit Score to Buy a Car?

A credit score is a numerical representation of an individual’s creditworthiness. This three-digit number, typically ranging from 300 to 850, provides lenders with an immediate assessment of the risk of lending money. For significant financial commitments like a car purchase, this score plays a role in determining eligibility and loan terms. Understanding your credit score before approaching a lender is an important step in car buying.

What a 687 Credit Score Means

A credit score of 687 falls into the “Good” or “Fair” category, depending on the specific credit scoring model used. While credit bureaus like FICO and VantageScore provide recognized scores, lenders often utilize industry-specific models, such as FICO Auto Scores, emphasizing past auto loan payment history. A 687 score indicates responsible payment history and reasonable credit management, suggesting a moderate risk to lenders.

This score is above the threshold for what many lenders consider “subprime” credit, which begins below 620. A 687 score means you are viewed as a more reliable borrower than someone with a lower score. While it demonstrates a capacity to manage debt, it does not represent the highest tier of creditworthiness, which starts around 740. Lenders will still evaluate other factors, but the 687 score provides a foundation for seeking auto financing.

How Your Score Affects Car Loan Offers

A 687 credit score influences the car loan offers you are likely to receive. While it qualifies you for a loan, the interest rates may be higher than those offered to individuals with excellent credit. Lenders assess risk; a 687 score suggests a moderate risk, which translates into an interest rate that compensates the lender for the risk. For instance, someone with a 687 score might secure an annual percentage rate (APR) in the range of 6% to 10%, whereas a borrower with a score above 740 could see rates below 5%.

This score also impacts the loan amount lenders might be willing to offer and down payment requirements. Lenders may feel more comfortable offering a loan amount to a borrower with a good credit history, potentially reducing the need for a large down payment. Conversely, a lower score might lead lenders to require a larger down payment or offer a smaller loan amount to mitigate their risk. Your credit score shapes the financial specifics of your loan, including monthly payments and total interest paid over the loan term.

Gathering Your Financial Information Before Applying

Before applying for a car loan, it is important to compile all financial documentation. This preparation helps streamline the application process and ensures you present a clear financial picture. Lenders require proof of income, which can include recent pay stubs from the last 30 to 60 days, or W-2 forms and tax returns from the previous one to two years if you are self-employed. Having these documents available demonstrates your ability to make loan payments.

You will also need proof of residence, such as a utility bill or a lease agreement, along with valid identification like a driver’s license or state-issued ID. Beyond these, it is important to review your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) to check for inaccuracies. Correcting errors before applying can improve your score and loan prospects. Understanding your current financial obligations, including existing debts and assets, is also beneficial when discussing loan terms.

Navigating the Car Loan Application

With your financial information prepared, the next step involves the car loan application process. You can choose to apply for a loan directly through a dealership, or seek pre-approval from banks, credit unions, or online lenders. Securing a pre-approval provides a clear understanding of the loan amount and interest rate you qualify for before selecting a vehicle, providing stronger negotiation leverage at the dealership. This initial inquiry results in a “soft inquiry” on your credit report, which does not impact your score.

When you submit an application, the lender will conduct a “hard inquiry” on your credit report, which can cause a slight, temporary dip in your credit score. However, credit scoring models recognize that consumers shop for rates, treating multiple inquiries for the same type of loan within a concentrated period (14 to 45 days) as a single inquiry. After reviewing your application and credit report, the lender will provide a decision within minutes. If approved, carefully review all loan offers, paying close attention to the APR, loan term, and any associated fees before signing the loan documents.