Buying a Car and Credit

Understanding how credit affects buying a car

Credit history can play a significant role in the car buying process. Whether you’re a first-time buyer or an experienced owner, monitoring your credit can be an important first step in exploring your loan options and payment plans.

A strong credit score may:


Qualify for an auto loan


Secure a lower APR


Improve lease options


Lower lifetime costs

What credit score do you need to buy a car?

Each lender has its own credit score requirements that determine what terms and interest rates to offer. Higher credit scores usually warrant better offer terms. Understanding your credit score before you start car shopping can help you know what terms you might expect and qualify for.


Credit Impact When Buying a Car

How fast will a car loan raise my credit score?

If you can establish a pattern of on-time payments, it may be possible to see your score increase within a few months. Whether and how quickly a car loan may impact your credit score may depend on your payment history and how much you owe across credit accounts. On-time car loan payments can help gradually increase your score.

Try the Credit Score Simulator to test financial decisions before you make them and learn how adding a car loan might influence your credit.

How buying a car could affect your credit score

A car loan or lease may increase or decrease your credit score. Use the free CreditWise® Credit Simulator to see how that financial decision could change your score before making your purchase.



On-time payments


Enhanced credit mix


Credit application


High unpaid loan balance


Dealerships all have different criteria for lease approvals, including the credit score necessary for the best lease terms. Credit scores in the Good to Excellent range may result in the best lease terms and conditions.

Each lender determines its own credit score requirements for car loan terms and interest rates. Credit scores in the Good to Excellent range may qualify for loans with better terms than lower scores.

An insurance quote should not affect your credit score, especially if they do not involve hard inquiries. An insurance company will check your credit as part of their quote process, but this check is not a “hard” pull and therefore will not be reflected on your credit report.

When you complete a loan application, you will most likely give the lender the approval to check your credit report. This type of inquiry is a “hard” inquiry which will be reflected on your credit report and may, in most cases, temporarily lower your credit score by a few points, although individual results may vary.

Related Resources

More CreditWise Resources

See how buying a car may affect your credit