Credit Score: What Is Good for Financing a Pre-Owned Car?

If you're in the market for a quality pre-owned vehicle, there are many variables to consider. Not only do you need to find the right vehicle with the features you want at a price you can afford, but you also likely need a loan to purchase the vehicle. 

When applying for a pre-owned car loan, the first thing that comes to mind is your credit score and what is considered good enough to finance a pre-owned car. 

Below, we dive into the ideal credit score for financing a pre-owned car, what makes a good credit score, and how Clutch can help you regardless of your credit rating.

What Is a Good Credit Score for Financing a Pre-Owned Car?

When looking to finance a pre-owned vehicle, a good credit score for financing a pre-owned car with Clutch is between 650 and 750. While your credit score isn't the only determining factor in getting approved for financing, a borrower with a 650 to 750 credit score likely has a clear credit report free of collections accounts, negative payment history, and excessive revolving debt, such as credit cards. 

Within this credit score range, you qualify for competitive interest rates from lenders and more flexible loan terms. With an even higher credit score, you likely have an even more favourable credit history, which can earn you even more favourable terms, like extra-low interest rates and longer available loan terms. 

Clutch Will Work With All Credit Situations

While having a good or even excellent credit score will set you up for our most favourable loan terms, having a good credit score doesn’t always equal good credit. At Clutch we also consider length of credit, debt to service ratio, and credit utilization, so having average credit or poor credit doesn't necessarily mean Clutch can't help. Clutch has relationships with a range of lenders capable of working with all levels of creditworthiness, even those with a poor credit rating. 

Maybe you have some late payments, missed payments, or collections accounts on your credit file. While many loan companies may reject your application, we work with lenders that are willing to work with these flaws to get you approved for an auto loan with lower interest rates than you can get elsewhere. 

Fill out our online credit application to see what you can get pre-qualified for. 

What Makes Up Your Credit Score

Your credit score is a measurement of your ability to manage your debt. Your credit score is based on the information on your credit report from each of the major credit bureaus, Experian, Equifax, and Transunion. 

While many credit scoring models exist, most lenders use the FICO model. Your FICO credit score can range from 300 to 900 -- the higher the score, the better financing terms you'll receive and the more financial products you may qualify for. 

Five weighted variables make up your FICO score and how you can improve them are as follows: 

Payment History

Your payment history accounts for 35% of your credit score, making it the most important variable. This variable considers your on-time payment history across all your debts, including credit cards, installment loans, retail accounts, and more. It also considers any collections items and missed payments or late payments. 

With a solid payment history, you're well on your way to a good credit rating. 

You can maximize the positive impact this variable has on your credit score by always paying at least the minimum monthly payment on all your debts by the due date. Clearing up any outstanding collections accounts by paying them off or settling them will also help. 

Amounts Owed

The amounts owed variable accounts for 30% of your FICO score. It considers a range of items on your credit report, including the total amount of debt you owe, the amount you owe on certain types of debt, the number of accounts you have with a balance, how much you owe on installment loans, and your credit utilization ratio. 

The latter is the balance on your revolving debts -- credit cards and lines of credit -- relative to their credit limit and is the most important part of this variable. Keeping your credit card balances low can help you attain a good score. 

Length of Credit History

The length of credit history variable makes up 15% of your FICO score. It considers the age of your oldest account, the average age of all accounts, the age of specific types of credit, and how long it's been since you used a certain account. In general, the longer your length of credit history is, the more positive impact this variable has on your credit score. 

You can't do much with this variable to increase your credit score, but you can mitigate any negative impact by not opening new accounts and leaving old accounts open. 

New Credit

The new credit variable accounts for just 10% of your FICO credit score. It considers any actions surrounding opening or trying to open new credit accounts, including:

  • The number of new accounts you've opened
  • How long it's been since opening a new account
  • How many hard credit inquiries -- creditors checking your credit for potential credit approval -- have you had in the past 12 months
  • How long it's been since a lender performed a hard credit check on you

There are no actionable steps to improve your credit score using this variable. However, you can avoid hurting your credit by not opening new accounts or applying for too many new credit accounts. 

Credit Mix

Your credit mix accounts for 10% of your FICO credit score and looks at what types of credit you use. Specifically, it looks at the mixture of revolving debt and installment credit, such as auto loans, mortgages, and personal loans.

You may improve this variable by adding different credit types to balance out the credit mix. However, adding new accounts will negatively impact your new credit and length of credit history variables, potentially lowering your FICO score. 

You Can Check Your Own Credit

If you're curious where your credit score stands or are looking to build credit, a key part is credit monitoring. By monitoring your credit report and score, you always know where you stand, if you're making improvements, and if there are any discrepancies in your credit report.

Clutch: Quality Pre-Owned Vehicles and Fair Financing for All Credit

At Clutch, you never have to choose between getting a fair auto loan and getting a quality car. We offer a collection of high-quality pre-owned vehicles that have been through a 210-point inspection and reconditioning process and include a 90-day or 6,000-km warranty. Plus, we have auto financing options for all types of credit. 

On top of offering quality pre-owned cars, all our vehicles include a 10-day or 750-km test-own period. If you don't love your Clutch vehicle within that period, you can return it for a full refund or exchange it for a different vehicle. 

We are also Canada's first 100% only automobile retailer, allowing you to shop for your next vehicle without going to a car dealership. Once you choose the vehicle you like, we'll bring it to you and complete the paperwork then. We'll also pick up your trade-in vehicle if you have one. 

Navigate to Clutch today to view our inventory, choose the perfect vehicle for you, and get pre-qualified for an auto loan.