What Is a Credit Score for a New Car?

When you use credit, the creditor will report your account to the credit bureaus. The bureaus maintain a database of this information and use it to create your credit report. Lenders may view this data when you apply for a new car loan, so it's a good idea to understand what credit score you may need to be approved.

Identification

Your FICO credit score is based on the information found in your credit report. Both positive and negative account information will impact your score. FICO scores have a range of 300 up to 850, and the higher your score the better. According to CNN Money, to qualify for the best interest rates on an auto loan, you will need a FICO score of 720. The minimum FICO credit score for approval for an auto loan is 500.

Significance

A higher FICO credit score means you will receive a lower interest rate on your auto loan. According to Bankrate, the average interest rate for a new 60-month new car loan is 5.61 percent as of March 2011. The average interest rate for a 48-month new car loan is 5.56 percent. The lower your score, however, the higher the interest rate and the more you will pay for the car overall. Scores below 640 can have an interest rate of 12 percent to 30 percent, according to Bankrate.

Consideration

At 35 percent, your payment history is the largest, single factor considered in the calculation of your FICO credit score. The second is your debt load, which is 30 percent. To improve your score, myFICO suggests making all of your payments on time and reducing your amount of debt. Just one late payment can have a detrimental effect on your FICO score, causing it to drop anywhere from 60 to 110 points, according to MSN Money.

Warning

Steer clear of companies that promise to repair your credit or raise your credit score for a fee. These companies make promises that may be a scam, according to the Federal Trade Commission. Credit bureaus are required to remove errors from a report but not accurate, negative information. If you have an error on your credit report, the Fair Credit Reporting Act gives you the right to dispute it with the credit bureaus and have it corrected yourself for free.