What FICO Score Is Needed to Buy a Car?

A FICO score is a numerical summary of an individual’s credit risk, used by lenders to assess creditworthiness. This three-digit number, ranging from 300 to 850, indicates how responsibly a borrower has managed financial obligations. For a car loan, this score is central to a lender’s decision. A higher FICO score signals lower risk, influencing loan terms.

FICO Score Ranges and Car Loan Eligibility

FICO scores are categorized into ranges lenders use to determine car loan eligibility and interest rates. Categories include Deep Subprime (300-500), Subprime (501-600), Nonprime (601-660), Prime (661-780), and Superprime (781-850). Each range suggests a different risk level and, consequently, different loan outcomes.

Borrowers with Superprime scores (781-850) qualify for the most favorable interest rates, averaging 5.18% for new cars and 6.82% for used cars in Q1 2025. These individuals receive the best loan terms. Those in the Prime category (661-780) secure competitive rates, with new car loans averaging 6.70% and used car loans at 9.06%.

Individuals with Nonprime scores (601-660) face higher rates, averaging 9.83% for new vehicles and 13.74% for used vehicles. The increased interest means higher monthly payments and a greater total cost. Borrowers in the Subprime range (501-600) experience even higher rates, with new car loans at 13.22% and used car loans at 18.99%.

For those with Deep Subprime scores (300-500), securing a car loan is challenging, and interest rates are higher, often reaching 15.81% for new cars and 21.58% for used cars. While a loan is possible with a lower FICO score, increased rates significantly raise the total vehicle cost.

Additional Lender Evaluation Criteria

While a FICO score is important, lenders consider other criteria when evaluating a car loan application. Consistent income and stable employment history demonstrate a borrower’s ability to make regular payments. Lenders look for steady income sources to ensure the borrower can meet new debt obligations.

The debt-to-income (DTI) ratio compares an applicant’s total monthly debt payments to their gross monthly income. Lenders use DTI to assess existing debt commitments, generally preferring a DTI ratio of 43% or lower. A lower DTI indicates a greater capacity to manage additional debt, improving loan approval and terms.

Making a down payment impacts loan approval and terms by reducing the amount borrowed and lender risk. A larger down payment means lower monthly payments and less interest. For new cars, 20% is recommended, and 10% for used cars.

The loan-to-value (LTV) ratio, calculated by dividing the loan amount by the car’s value, indicates lender risk. A lower LTV, below 100%, suggests less risk and results in more favorable rates and better approval odds. Lenders have LTV ceilings, typically 100% to 150%; exceeding these limits hinders approval.

For applicants with limited credit history or lower scores, a co-signer strengthens the application. A co-signer is legally responsible if the primary borrower defaults, increasing approval chances and potentially securing a lower interest rate. The vehicle itself is also a factor; older, high-mileage cars are riskier due to faster depreciation and increased repair potential, leading to shorter loan terms and higher interest rates.

Strategies to Enhance Your FICO Score

To enhance your FICO score for better car loan terms, consistently make all payments on time. Payment history accounts for 35% of your FICO score. Even one payment 30 days or more past due can negatively affect your score, while consistent on-time payments build positive credit.

Manage credit utilization, the amount of credit used relative to total available credit. This factor makes up 30% of your FICO score. Keep credit card balances low, ideally below 30% of limits. Paying down existing credit card debt improves this ratio.

The length of your credit history contributes 15% to your FICO score; longer histories are viewed favorably. Maintaining older accounts in good standing demonstrates responsible credit management. A diverse credit mix, including credit cards, installment loans, and mortgages, accounts for 10% of your score.

New credit applications temporarily lower your FICO score due to hard inquiries. Each inquiry causes a small, temporary dip, and multiple applications suggest financial distress. Avoid opening new credit accounts or applying for loans in the months before a car loan application.

Regularly review credit reports from Equifax, Experian, and TransUnion. Check for errors or inaccuracies and dispute them. Correcting discrepancies ensures your credit score accurately reflects your financial behavior and helps secure a car loan.