When customers walk through the doors of your dealership in search of the perfect new car, they likely have lots of questions. Therefore, it's crucial for dealership staff to be familiar with all of their makes and models on the lot, as well as how auto loans work. One of the most common financing questions buyers ask is, "What FICO score is used for auto loans?"

This guide reveals everything you need to know about how FICO scores impact auto loans and what it means for car shoppers. To learn more about financial services for car dealers, trust the team at Edge Financial Services. 

How Credit Scores Impact Auto Loan Financing 

Before granting anyone a car loan, auto lenders need to assess the buyer's credit history. Good credit scores and fully paid credit card balances typically indicate a buyer is a reliable loan candidate. Lenders want to make sure that a borrower is capable of paying back their loan and making sound financial decisions. 



If someone walks into your dealership ready to buy a car but they're unable to secure a loan, they won't be able to buy a car, which means your business suffers too. Working with a financing provider who underwrites auto loans based on a FICO score check is the best way to benefit your dealership and your customers. 

What FICO Score Is Used for Auto Loans?

The auto industry is constantly changing, but using credit scores to determine loan financing remains the same. Buyers may think that their overall FICO score (which ranges from 300 to 850) is what lenders check before securing a loan. However, there are certain industry-specific scores that paint a clearer financial picture. 

Whether someone is looking to buy a car or a house, their industry-specific FICO score can provide insight into how reliable a borrower is. The FICO Auto Score takes into account a buyer's standard credit history and payment habits, but it also considers any previous auto loans they took out. If the industry-specific FICO score raises red flags about the buyer, many lenders will hesitate to approve them for a car loan.

Understanding the FICO Auto Score for Car Loans

While overall credit scores range from 300 to 850, a FICO Auto Score can be anywhere from 250 to 900. Every lender is different when deciding what score is adequate to approve a loan. However, the following scores are an average indicator of different loan terms:

• 500 or below: Approved financing but usually at higher interest rates
• 675: Approved for a used car loan
• 730: Approved for a new car loan

Dealerships that partner with lenders may be able to help their customers secure loan approval, even with a low credit score. 

Ways To Improve a FICO Score

Knowing what FICO score is used for auto loans is helpful, and buyers with imperfect credit can improve their scores in several ways. Taking steps to increase the FICO score can give buyers better interest rates and, therefore, lower monthly payments. Financial experts recommend paying all bills on time, increasing credit limits, and paying down high credit card balances. 

In addition, saving for a down payment helps lenders see the buyer is serious. All of these tactics can improve the industry-specific FICO score and help a buyer secure a reasonable auto loan. 

Partner With a Reliable Auto Loan Lender

It's one thing for car dealers to know what FICO score is used for auto loans, but it's another for them to secure their customers with loans regardless of their credit. Edge Financial Services provides reasonable loan terms to customers with less-than-ideal credit scores so you as a dealer can boost your sales. Our experts give quick turnarounds on loan approvals and funding so your customer can drive a brand-new car off of your lot. 

Reach out to Edge Financial Services today to learn more about our financing program for car dealers. Call (866) 890-2415 to speak with a specialist.