How To Raise Your Credit Score to Buy a Car 

Written by Banks Editorial Team
4 min. read
Written by Banks Editorial Team
4 min. read

Are you looking to buy a new car? You might want to check your credit score first. This three-digit number determines which cars you can afford and how much they’ll cost. Raising your credit score while looking for a new car will put you in a better position for financing. We’ll share some strategies to boost your credit score and how poor credit can affect your purchase.

Build Credit and Savings with Self

Self, also known as Self Lender, offers an easy way to build your credit scores with a credit builder loan and credit card.

What Credit Scores Do Auto Lenders Use?

Each auto lender has different credit score requirements. Most of them will either use a FICO Score or VantageScore when assessing borrowers.

FICO Score

FICO scores range from 300 to 850. A higher score helps you qualify for a better loan. A good credit score is sufficient for most lenders. Good scores range from 661 to 780. Consumers fall within one of these credit score categories:

  • Poor: 300-579
  • Fair: 580-669
  • Good: 670-739
  • Very Good: 740-799
  • Exceptional: 800-850

Payment history and credit utilization make up 65% of your credit score. Length of credit history, credit mix, and new credit make up the remaining 35% of your credit score. You must have a credit card, loan, line of credit, or similar item on your credit report to qualify for a FICO score. The tradeline must be at least six months old.

Auto lenders can also use your FICO auto score to assess your loan amount. This score places extra emphasis on car loan payments. Lenders can only benefit from the FICO auto score if you’ve bought a car before and made loan payments. 


The three credit bureaus joined forces to create VantageScore in 2006. The younger of the two offers a more generous path to qualification. You’ll still need a tradeline, but it doesn’t have to be six months old. VantageScore also ranges from 300 to 850, but lenders may have different credit requirements for each score. Lenders may have requirements set higher for VantageScores than FICO scores. VantageScore also has five categories:

  • Poor: 300-499
  • Fair: 500-600
  • Good: 601-660
  • Very Good: 661-780
  • Exceptional: 781-850

Each VantageScore category is more accessible than the respective FICO score categories. A Good VantageScore would only be a fair FICO score. 

Average Credit Score to Buy a Car

Experian releases a quarterly State of the Automotive Finance Market report revealing car buyers’ average credit scores. Their Q4 report revealed average credit scores of 735 for new cars and 675 for old vehicles. Additionally, 65% of the car financing went to prime borrowers, while 16% of the financing went to subprime borrowers.

Can You Buy a Car with a Poor Credit Score?

A poor credit score puts you in an unfavorable position. While it is possible to buy a car with a low credit score, it comes with consequences. Consider raising your credit score before financing a car. We have outlined the potential outcomes of buying a car with poor credit below.

Build Credit and Savings with Self

Self, also known as Self Lender, offers an easy way to build your credit scores with a credit builder loan and credit card.

Consequences Of Buying a Car with Poor Credit

  • Paying A Higher Interest Rate: Lenders view applicants with lower credit scores as having higher risks. The lender can obtain the car as collateral, but cars depreciate in value each year. Lenders would rather have a borrower pay the loan than seize a declining asset. To mitigate default risk, lenders will set higher interest rates to obtain more money per month.
  • Paying A Larger Down Payment: Borrowers can get around higher interest rates with high down payments. Increasing your down payment gives you more negotiation leverage. Depending on your credit score, some lenders will require a higher down payment than usual just to qualify. Saving up for a larger down payment can slow down your path to owning a car. You should build your credit score as you save up.
  • Buying A Different Car from What You Want: Low credit borrowers may not get sufficient financing for a dream car. Some borrowers may have to settle for a used vehicle. Experian’s quarterly reports always show a sizable difference between credit score requirements for new and used cars. 
  • Having to Get a Co-signer: A co-signer can help you qualify for an auto loan, but it’s not easy to get one. Co-signers become legally responsible for paying off your loan if you can no longer afford it. Co-signers have nothing to gain and can get stuck with extra debt. You’ll have to ask a friend or family member with high credit to incur that risk so you can get a loan. Someone may become your co-signer if you can demonstrate your ability to pay back the loan. 

How To Raise Your Credit Score to Buy a Car

Raising your credit score helps you access more loans and get more attractive rates. You can use these strategies to build momentum and end up with a higher credit score.

Pay Bills on Time

Making on-time payments demonstrates your ability to manage debt. Paying your bills with a secured credit card ensures your financial activity gets reported to the three credit bureaus. Payment activity makes up 35% of your credit score. Getting this part right will help you build a strong score. Keep track of expenses, so you avoid overspending.

Keeping Credit Card Balances Low

Credit cards can improve your score by reporting payments to the bureaus. However, the same financial instrument can devastate your score if you fall behind on payments. High-interest rates will make it more difficult to claw your way out of debt. Keeping your credit card balances low makes debt more manageable.

A low credit card balance will also decrease your credit utilization ratio. This ratio makes up 30% of your credit score and measures your available credit limit against total debt. For example, if you have a $5,000 limit on your credit card and owe $1,000, your credit utilization ratio is 20%. Experts believe a 30% credit utilization ratio improves your credit score. However, a credit utilization ratio below 10% is ideal.

Avoid New Applications

When building your credit score, don’t apply for most loans. Applying for new credit can trigger a hard pull or hard credit inquiry. These pulls and inquiries can hurt your credit score and leave you in a bad position. Lenders may think you’re in a financially desperate situation to submit several applications for loans and lines of credit. This category makes up 10% of your credit score, so it’s less significant than your payment history and credit utilization ratio. However, every point adds up, especially when building your credit score.

Get A Credit Builder Loan

The Credit Builder Loan is one of the best loans to get when raising your score. Self’s Credit Builder Loan doesn’t conduct a hard pull or hard inquiry. They only request a soft pull which protects your credit score. A credit builder loan‘s sole purpose is building up your payment history. 

Self will report your loan payments to the major credit bureaus. As you repay the loan each month, your credit score will grow. Self lets you borrow a loan with a 12–24-month term, and loans start with $25/mo payments. You can pay up to $150/mo for your loan and get the proceeds back at the end minus interest. Higher monthly payments demonstrate your ability to manage more debt. Rebuild your credit with Self’s Credit Builder Loan today.


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