Lenders consider a credit score of 630 to be subprime, but getting a car loan with a credit score of 630 is possible in nearly every case. Slip just 10 points lower, to 620 or worse, and your credit will be regarded as “bad.” At this tier, it may become significantly harder to get approved.
The Whole Picture, Not Just Credit
In any case, your credit score is just one of the criteria that lenders look at when they decide the disposition of a car loan application. The others include:
- Loan to value (LTV): this is the amount financed as compared to the value of the vehicle.
- Age of vehicle: the older the vehicle, the higher rate you’ll have to pay.
- Term of loan: length of the repayment term, typically 24-84 months.
- Miles on vehicle: the higher the mileage, the higher rate you’ll have to pay.
- Down payment: bigger down payments help with approval.
- Time on job: the longer you’ve been with the same employer, the better.
- Time at residence: the longer you’ve been at the same address, the better.
- Monthly income before taxes: the higher your income, the better chances you’ll have at approval.
- Total debt to income (DTI) ratio, including new payment: how much of your income is being allocated toward existing debts?
Typically, a score of 630, though subprime, is high enough to get approved, and we can help. We can put you in touch with a local finance specialist who can guide you through the process.
How a 630 Credit Score Impacts Your Application
The criteria from the list above that will be directly affected by a credit score of 630 are the LTV, amount of a down payment, and your DTI. With a subprime credit score you may only be able to borrow 85 percent of the value of a vehicle. That may require you to provide a larger down payment. Lastly, a borrower with excellent credit may be able to have a DTI of 40-45 percent, but a subprime borrower will need a DTI that is closer to 35 percent.
What Will Your Interest Rate Be, Given a Score of 630?
As a rule of thumb, the lower your credit score is, the higher the interest rate you will have to pay. Where a person with a credit score of 720 may only pay 6 percent on a used car loan, a person with a score of 630 will have to pay closer to 10 percent or higher. Along with a higher interest rate, a subprime borrower will often have to opt for a shorter loan term. Your loan term may be as much as 12 months shorter than that of a borrower with a prime or excellent credit score. Typically, 60 months will be the maximum, while 36-48 months is the smarter choice.
Improving Your Odds of Approval
A quick way to improve your chances of getting approved for a car loan with a credit score of 630 is to lower your DTI. One way to do that is to pay down any credit card debt you have. Since paying extra on a credit card will lower the next month’s payment somewhat, your DTI will be lower. Also, since FICO builds thirty percent of your credit score based on amounts owed, paying extra on your credit cards should raise your credit score slightly.