Although you are typically regarded as a subprime consumer if your credit score is 626, this won’t always stop you from taking out loans. As of 2021, the average FICO credit score in the US is 714; scores between 580 and 669 are regarded as “fair” credit scores.
This post will explain what your 626 credit score indicates, whether you can get a particular kind of loan, and what you can do to raise your credit score.
Yes, you can buy a car with a 626 credit score, but it might be more challenging and expensive than if you had a higher score.
Here’s what you need to know:
- Minimum credit score requirements: While there’s no universal minimum, most lenders require a score of at least 600 for a traditional auto loan. However, with a 626 score, you might have fewer options and higher interest rates.
- Impact of inflation: Rising interest rates due to inflation can make it even harder to secure a subprime auto loan. Lenders may be more cautious and impose stricter requirements.
- Alternatives to traditional loans: Consider Upstart, which specializes in loans for borrowers with less-than-perfect credit histories. They look beyond your credit score and use over 1,000 data points to assess your financial situation.
Here are some tips to improve your chances of getting a car loan with a 626 credit score:
- Check your credit reports: Ensure there are no errors that could be dragging your score down. You can get free copies of your credit reports from the three major credit bureaus at annualcreditreport.com.
- Work on your credit score: Focus on paying your bills on time and reducing your credit utilization.
- Save for a down payment: A larger down payment can increase your chances of approval and potentially lower your interest rate.
- Consider a co-signer: Having a co-signer with good credit can help you qualify for a loan or get a better interest rate.
- Shop around: Compare loan offers from multiple lenders to find the best terms for your situation.
Here are some additional resources that you may find helpful:
- Upstart: https://www.upstart.com/
- Credit Karma: https://www.creditkarma.com/auto/i/credit-scores-car-loan
- Experian State of the Automotive Finance Market report: https://www.experian.com/blogs/ask-experian/state-of-automotive-finance-market-report/
Remember, even with a 626 credit score, buying a car is still possible. By following these tips and doing your research, you can increase your chances of getting approved for a loan and finding a car that fits your budget.
Can I get an auto loan with an 626 credit score?
The short answer is yes, but you’re likely to get a significantly higher-than-average interest rate. To put it into perspective, as of November 2022, the typical borrower with prime credit (720 or higher FICO score) got an APR of 5.34% on a 60-month new auto loan. With a score in the 620-659 credit score range, the average APR was 11.76%. And with a score of 590-619, the average rate was 15.92%.
It’s also important to note that, even for borrowers with identical credit scores, interest rates can differ dramatically between lenders. And this is especially true for borrowers in the subprime credit tiers (below-average credit scores).
So, if you’re buying a home or car, it’s important to shop around for the best loan terms. In fact, the FICO model is designed to encourage rate shopping. For the purpose of scoring, any credit inquiries for the same kind of loan made within a short timeframe—typically two weeks—will be combined into a single inquiry. As a result, applying to several lenders or lending platforms doesn’t lower your credit score—especially for those like Upstart that take into account factors other than just applicants’ credit scores.
Can I get a mortgage with an 626 credit score?
Yes, your 626 credit score can qualify you for a mortgage. And you have a couple of main options.
If your credit score is 580 or higher, you can get an FHA loan with just a 3 percent down payment to purchase a home. 5%. Although these Federal Housing Administration-guaranteed loans have drawbacks (like the need for FHA mortgage insurance), they can be a fantastic choice for people who wish to buy a home.
To get a conventional mortgage, the minimum credit score requirement is 620 per Fannie Mae’s lending standards. However, a credit score on the lower end of the spectrum comes with certain caveats. For instance, in order to obtain a conventional loan with a percentage of 20620, you will need to have a maximum debt-to-income ratio of 2036% and be ready to make a down payment of 2025%. You can obtain a conventional loan with as little as 5% down payment (or even 3% in certain cases), but the minimum credit score needed to qualify for this loan is 660 based on the most recent Fannie Mae underwriting guidelines.
How to buy a car with Bad Credit. Car buying Tips
FAQ
Can I buy a new car with a 626 credit score?
What is the lowest credit score to buy a car?
What can I get with a credit score of 626?
|
Type of Credit
|
Do You Qualify?
|
|
Unsecured Credit Card
|
YES
|
|
Home Loan
|
YES (FHA Loan)
|
|
Personal Loan
|
MAYBE
|
|
Auto Loan
|
MAYBE
|
Can I finance a car with a 625 credit score?
Can you buy a car with a 600 credit score?
You can buy a car with a 600 credit score, but you’ll end up paying a significantly higher interest rate than a borrower with excellent credit. Not all lenders will approve borrowers with a 600 credit score, so you may need to shop around or use a lender that specializes in subprime borrowers.
What credit score do you need for a car loan?
Most used auto loans go to borrowers with minimum credit scores of at least 675. For new auto loans, most borrowers have scores of around 730. The minimum credit score needed for a new car may be around 600, but those with excellent credit often get lower rates and lower monthly payments.
Can I get a car loan with a low credit score?
Terms may apply to offers listed on this page. Some loan types — like mortgages and personal loans — require a borrower to have a minimum credit score. Auto loans are different. It is possible to qualify for a car loan with any credit score, although the lower your credit score, the higher the interest rate you can expect to pay.
Do you need a 650 credit score to buy a car?
There’s no standard minimum credit score required for a car loan, but those with lower credit scores might have to pay more interest than someone with better credit. Can you finance a car with a 650 credit score?