Prime Credit Scores for an Auto Loan

Your ability to get a car loan depends largely on your credit score. Whichever financial lender you go to for a loan will check your credit score and if it's not a prime rate, you're not likely to get the loan. Or, if the lender is willing to give you the loan, you will be charged a higher interest rate. Your goal should be to keep your credit in the prime range to get the best deal you can from your financial lenders. This applies not only to car loans but other types of loans as well.

Prime Scores

Credit scores are a summary of your credit history and credit worthiness. Scores range from 300 to 850. According to Leaseguide.com, the U.S. average is around 720. However, a prime rate is considered above 680 to 700. The number that will get you the best loan interest rate varies somewhat by lender. Subprime rates are generally below 640. Credit scores in this range are likely to bring about a rejection of your loan or a higher rate. People with credit scores below 500 can figure that they probably won't be approved for a loan.

Know Your Score

Know your credit score before you begin shopping for a car; this will help you avoid paying an unnecessary rate. Obtain a free copy of your credit report from the Annual Credit Report website and check to make sure it is accurate. If you spot an error, contact the creditor and the credit reporting bureau to have it fixed. Buy access to your credit scores online from Trans Union, Experian and Equifax.

Shop Around

Lending rates vary among lenders. The break points for considering you credit score prime may, too. If your score is in the 680 to 700 range, check with lenders to find one that will consider your score prime and give you the better rate. Speak with a loan officer about lending guidelines. Check with your own bank; it may be willing to look more favorably upon scores that are on the bubble.

Improve Your Score

Improve your credit score by improving your credit history. Don't overextend your ability to pay your bills on time. Pay off accounts with balances on them, but leave the accounts open. The fact that you have been given credit by someone else will help your credit score. If you qualify, open other accounts, but you don't need to use them. Do not allow loans to default because that will drive down your score and remain on your credit history for seven years.