What Credit Score Do Car Dealers Use?

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Purchasing a new car can be a bit confusing. However, with our team here at Granite Hyundai, you never have to second-guess yourself before, during, or after the car shopping process. If you are asking "What credit score do car dealers use?" when deciding whether or not to give you an auto loan, this post is the right one to stick with. Not every credit check is the same, and there are specific auto credit scores that help determine whether or not someone is a "good" borrower. Remember, credit takes time to build, and we can also be a team in your corner. Let's dive in!

What is a Credit Score?

A credit score is a numerical representation of your past and current debt management. The credit score system starts at 300 (poor credit) and goes up to 850 (excellent credit), so there is a lot of leeway here. Not every person has established credit, although when you try to buy a car, the dealer will need to pull a credit report to check your past debt repayment and other related information.

Different Types of Credit Scores

There are two primary types of credit scores: the FICO Score and the VantageScore. Your FICO credit score will also include an auto score that reflects your past car payments and debt, so this is the one they will typically check. VantageScore is another credit score mainly involving the three major credit bureaus: Equifax, Experian, and TransUnion. You may see a credit pull for both, or you may be asked for additional credit-related information when shopping for a new car, so be prepared to have this readily available.

Credit Scores Used by Car Dealers

What credit score do car dealers use? Credit scores used by car dealers are typically your FICO Auto Scores. This will reflect any past vehicle leases or purchases you have made. The score system for FICO Auto Scores is also slightly different from the regular credit checks and ratings used for a credit card or loan, ranging from 250 to approximately 900, with higher scores indicating lower risk.

TIP: A higher score means a better chance of approval and lower interest rates.

How Credit Scores Affect Loan Terms and Rates

Credit scores can (and will) affect loan terms and rates. Just like when you apply for a loan or a new credit card, your credit score plays a big role in not only deciding if you can purchase a new car, but also what rate you will have to pay. Car dealers use your credit report to see what type of borrower you are, giving priority to people who pay their debt back in an agreed-upon time.

How Car Dealers Evaluate Credit Scores

Car dealers and auto loan processors evaluate credit scores in a few ways. The first step is to run a detailed credit check on whoever is trying to buy a new car, truck, or SUV. After that point, the car dealer can view your past debt, repayment history, on-time payments, late payments, amounts currently due, and your general credit and debt-to-income ratio. A clean credit check comes back with no defaulted payments or current outstanding debt that would disqualify you from another large purchase.

An example of this would be trying to finance a second or even third car in your name with a lower credit score, such as 500 or 600. That would raise a red flag with the car dealer and might result in a declined application.

Checking Your Auto Credit Score

The best and fastest way to check your auto credit score is to go through FICO, as it is also closely related to what credit score car dealers use. The main credit bureaus typically release updates on your credit score every month or so. However, to obtain an auto score, you will need to pay for a FICO subscription or purchase a detailed report from Equifax, Experian, or TransUnion. You can claim your score, prove your identity, and reach out to them, or find an auto credit score section on their respective websites.

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Improving Your Credit Score Before a Car Purchase

Here at Granite Hyundai in Somersworth, NH, we cannot stress the importance of a good credit score before car shopping enough. When shopping for a new car, whether it's a Hyundai or not, your credit score should be in decent shape. Repairing your credit score before a car purchase can be achieved by paying down high debts, consolidating debts, using a credit repair program, requesting amendments or corrections to your credit report, and reducing your spending in the months leading up to the big application.

Credit Score Requirements for Different Types of Cars

Credit scores required to purchase different types of cars are yet another factor that influences the car-buying process. Normally, the higher the sticker price on your vehicle of choice, the higher your credit score should be to get approved for a loan. You have a better chance of securing an affordable vehicle with so-so credit than a luxury car valued at $50,000, $75,000, or even $100,000. The industry preference for credit when trying to get a new car is anything over 660, so try to make sure you are around there when applying.

New vs. Used Car Purchases

Securing the appropriate financing for new versus used car purchases is another topic we will address today. Car dealers will need you to have a higher credit score on average for a brand-new vehicle compared to a lesser-priced used one, but that does not mean you can easily get either. Financing a car, truck, or SUV is a major investment both for you and your lender, so the newer and pricier it is, the more they will scrutinize your credit score and repayment history.

Leasing vs. Financing

Leasing compared to financing (buying) a car is going to be yet another thing to think about when going over your credit history. When you lease a car, your credit score determines the APR you will pay monthly to own your vehicle, often resulting in higher payments and shorter contract durations with high interest rates. The same basic rule applies to financing, although you can usually negotiate a longer repayment period when buying vs. leasing at a slightly cheaper monthly rate. Either way, your poor or subprime credit will impact the total amount of interest you pay throughout the lease or financing period.

Frequently Asked Questions

The team at Granite Hyundai wants to set you up for success the next time you visit a dealership to purchase or lease a new car, truck, or SUV. We are top-rated and trusted in car sales right here in the community, plus you can always come to see us about credit-related questions, including what credit score do car dealers use, before we run any credit checks.

What Is the Minimum Credit Score for Buying a Car?

There is no single or universal minimum credit score needed for buying a car. However, most credit scores over 660 (661+) will result in approval with fewer hurdles you have to jump on your end. You can also expect better and lower interest rates when applying for a car in the upper 600 credit range. Applicants with 700+ credit will have an easier time and a relatively low monthly or annual interest rate.

Can I Buy a Car with a Bad Credit Score?

Yes! You can buy a car with a bad credit score. However, purchasing a vehicle with a low or limited credit history can mean worse rates and repayment terms. When shopping for a car with bad credit, consider bringing a larger down payment to offset the monthly costs associated with financing or leasing. Higher credit will always make the process easier and less expensive, both in the long term and the short term. If possible, try to improve your credit score through our Credit Repair Program here at Granite Hyundai or by making wise financial choices.

How Often Should I Check My Credit Score?

Credit scores are typically updated monthly by the three main bureaus, so around every 30 days is a fair timeline. An auto score is more private and requires a FICO subscription or a one-time purchase, which is something we want to note. Your regular credit report, through a service like Credit Karma, will not reflect your exact auto credit score or number. They are slightly different. If you have further questions about obtaining an auto credit report, please don't hesitate to contact our friendly team at Granite Hyundai.

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Use Granite Hyundai's Credit Repair Program

Granite Hyundai offers a Credit Repair Program right here at our dealership, tailored to help even those with low or no credit history get the car, truck, or SUV they are interested in. If you're wondering what credit score do car dealers use, we can help check your credit, note any discrepancies, and provide tips to improve your score in less time than you think. Maintaining a healthy credit history is all about repaying your loans for big and small purchases, and our team is ready to be here every step of the way. Contact us or stop by in person!