So you need a new car but are uncertain about being approved for a loan because of your credit score. We know that there is a minimum credit score for auto loan approval. In order to get a good deal, you have to have a really good credit score. Sadly, not a lot of us have outstanding credit scores. In fact, the average American has an average credit score of 678 and according to the scoring system that is a marginal credit score. You have to have a score of 720 and above to be considered as having prime credit.
Minimum credit score for auto loan
Your credit score from the credit
reporting bureaus is used by lending companies to measure how much of a risk you are. Having a poor credit rating can raise a red flag that means you are more likely to miss payments. So if you have a poor credit score, more will be required of you such as a larger down payment or a higher interest rate.
What if I am rejected because of my credit score?
If you don’t know your credit score and have been rejected for an auto loan for credit-based reasons, you have the right to request a copy of the credit report and score, the very same copy that the company has used to base their decision. This is according to the FACT Act. Make full use of this opportunity to study your credit report and score. Check for misinformation or unusual activities.
After having been rejected for auto loan, or any loan for that matter, do not immediately apply for another one. This can reflect badly on your credit report. After any rejection, wait a while, do what you can to improve your score before pursuing another loan.
This is due to the fact that when you apply for a loan, the lender will check your credit report and score. When they do, this will appear on your credit report. Every inquiry on your credit report is visible and when the record shows that you have had several inquiries, it may show desperation. It will give the impression that you are trying to get a loan but could not find one.
Improve your score
There are many ways to improve your credit score. None will take overnight, sadly. The fastest way to improve it is by paying down credit card accounts or other loans, if you have those. If you can, it is even best to pay it all off. With a credit card, the bigger amount you have used up in your credit limit, the lower your score will be so minimize your existing account to only 10% if you can. Check your credit report for any inaccuracies and correct errors. A reported late payment (that you didn’t actually make), identity theft, a credit limit that appears lower than it actually is, unpaid accounts that have been settled can all affect your score. Remember that all these contribute to your score.