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For many of us, owning a car is more than getting where we need to go. It’s also about relaxing on the open road, listening to our favorite tunes and seeing the sights. Maybe you’ve already started looking at ads and reviews and figuring out what you can afford. But, is there more you should know besides features and sticker price?

How Your Credit Score Affects What You Pay

If you plan to finance your next ride, keep in mind that the cost won’t just be the price you settle on with the seller. It also will depend on the interest rate and fees you pay. And, not everyone qualifies for the same interest rate. The rate you’ll be offered depends on several things.

The #1 Factor

What influences your auto loan’s interest rate the most is your credit score. Although not all credit scores are calculated in exactly the same way, they do follow similar rules. In general, some of the factors that make up your score include your payment history, how much you still owe, the type of debt you have and how long you’ve had it, and other factors.

Two credit scoring models commonly used by credit reporting services and lenders are FICO® Score and VantageScore®. The table below shows how each type rates credit scores.

Rating FICO® Range VantageScore® Range
Very Poor 300-579 300-499
Poor N/A 500-600
Fair 580-669 601-660
Good 670-739 661-780
Very Good 740-799 N/A
Exceptional 800-850 781-850

What Does That Mean for You?

In general, it means that although different lenders use different measures, people with exceptional credit scores may qualify for the lowest rates, while people with lower credit scores will often qualify only for loans with higher rates.

High Credit Score → Low Interest Rate
Lower Credit Score → Higher Interest Rate

Other Factors

  • The size of your loan and down payment. Borrow less or make a large down payment, and you’re more likely to get a lower rate.
  • The length of the loan. Shorter term loans usually have lower interest rates.
  • The age of the car. Typically, the newer the car, the lower the interest rate.

Is There a Magic Number?

By now, you may be wondering if you need a specific credit score to buy a car. Although there’s no magic number that’s standard among lenders, they do use credit scores as guidelines to determine who qualifies for what rates.

If you’re not sure where you stand, you can order a free copy of your credit report* 3 to 6 months before applying for an auto loan. That way, if you need to improve your credit, you’ll have time to do it.

Tips for Improving Credit

Here are some simple steps to get you started.

  1. Check your report for mistakes. After ordering your credit report, review the information for any mistakes that could be lowering your score and contact the reporting service to have the information corrected.
  2. Pay your bills on time—always. Lenders want to know that you’ll pay back what you’ve borrowed, so showing that you can make on-time payments will help your creditworthiness. Even if you’ve already missed payments, making consistent payments from now on (and catching up if you can) will help your score recover over time.
  3. Pay off your small accounts. Do you have any accounts with small balances? It’s best to pay those off if you have multiple accounts, because credit bureaus may dock your score for having too many accounts with outstanding balances.**
  4. Be strategic about applying for new loans or credit cards. Your credit score may be dinged if the average age of your accounts is too young or you carry high balances. However, if you have almost no credit history, it may be wise to open a credit card now so you can start building a history of timely payments. Navy Federal’s nRewards® Secured card earns rewards while building your credit.
  5. Be patient. You’ll need more than a few months to improve your credit. Be aware that if your credit score is low due to multiple missed payments or similar circumstances, it can take more time to rebuild. If this is your situation, you may still qualify for an auto loan from Navy Federal Credit Union. We’ll consider your relationship with our credit union as a whole in addition to your credit score—you’re not just a number here!

Use Navy Federal’s Mission: Credit Confidence Dashboard to see tips and resources to build, rebuild or manage credit. Use our tools to:

  • learn how to overcome debt
  • learn how to get started if you have no credit
  • monitor your credit score and set up alerts to notify you of changes
  • use the score simulator to see how certain actions (like adding or paying down debt) could affect your score

Ready to Get Started?

If you’re ready for an auto loan, Navy Federal Credit Union offers great rates, 100% financing and exclusive military discounts1—often with decisions in seconds. Check out how much you can save with our low-rate auto loan options for new and used vehicles.

*You can order reports from all three credit reporting companies (Experian, Equifax® and TransUnion®) or order one at a time.
**Source: myFICO, “How to repair my credit and improve my FICO Scores.”
1Direct deposit required. This military special may expire at any time. Applicants must contact Navy Federal by phone or visit a branch to receive the discount. Active Duty rate discounts (which are also available for retired military members) can be applied, subject to certain restrictions.



This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.