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There’s no single, minimum credit score requirement to refinance a car. Lenders consider a variety of factors when reviewing your refinance application.
A better question to ask would be, how does credit score affect refinancing? You’re more likely to be approved and receive lower interest rates on a refinanced car loan when you have a strong credit profile. While it’s possible to be approved for a refinance with a low credit score, it can be tougher to qualify, and you could pay higher interest rates.
Learn more about the credit score you need to refinance your car and what can affect your odds of loan approval.
There’s no specific score you need to refinance. When lenders look at credit score for a car refinance, what they really want to know is whether you’ll pay the loan back responsibly. Higher credit scores usually show that you’re an experienced borrower with a good track record of paying your debts.
Some lenders do set a minimum credit score requirement, usually 600. However, the best loan offers are typically reserved for FICO scores of 700 or higher.
Here’s a breakdown of FICO score ranges:
Yes, it’s possible to refinance with fair or poor credit. Many lenders work with borrowers with all types of credit scores. However, if you have poor credit (below 580), your options may be limited compared to someone with a higher credit score. You’d pay higher interest rates, too.
One thing to keep in mind about auto refinancing with bad credit is that you may want to consider adding a co-borrower, especially if they have the credit score needed to refinance a car. Adding a co-borrower may help you get approved for a loan, and it could help you qualify for lower rates, too.
Your credit score influences many different aspects of a refinance loan offer, including your approval odds and overall costs. Here’s a breakdown of how different credit scenarios impact an auto refinance:
The higher your credit score for a car refinance, the more likely you are to receive an offer with low interest rates and flexible terms. On the other hand, a low credit score often means fewer loan offers, higher APRs, and potentially a higher overall cost for the refinance.
Try entering your loan details into an auto refinancing calculator to see how different factors could affect your payment and total interest.
There’s more to a refinance application than just your credit score. Lenders use a variety of other data points to gather information about you and decide whether to approve you. If you have a weaker credit score, it’s possible you can offset it with stronger factors elsewhere in your application:
Lenders vary in their loan requirements, which is why it’s smart to collect offers from multiple different lenders.
Working on your credit before refinancing can help you get the credit score needed to refinance a car. It takes a little time to build credit, so focus on progress over perfection. You might be surprised at how small changes can still make a difference, and you could see a change in just a few months.
Here are some practical tips you can use to start raising your credit score:
It’s important to note that refinancing can have an impact on your credit score. Filling out a refinance application can trigger a hard inquiry on your credit report and cause your score to drop by a few points. When you start shopping for loan offers, try to time your applications to happen around the same time.
You can shop refinance rates with RefiJet and pre-qualify for auto-refinancing with no impact on your credit score. RefiJet lets you compare pre-qualified offers from top lenders to see how much you could save. When you find an offer you like, move forward by filling out a formal application.
Following are some of the most commonly asked questions about the credit score needed to refinance.
Though there’s no specific minimum credit score required for refinancing, some lenders require at least a 600 credit score. However, it’s possible you may be approved with a lower score if you have other factors working in your favor, such as a strong income or low debt-to-income ratio. You may also refinance with a co-signer who has strong credit.
Credit score can affect refinancing approval, not just the APR. That’s because there’s a risk a lender won’t approve your refinancing application if you have poor credit. If your application is approved, you could still contend with high interest rates and larger loan fees compared to someone with strong credit.
Lenders will look at the bigger picture of your financial situation: how much money you make, your income compared to your debts (debt-to-income ratio), and the value of the vehicle compared to the total loan amount. If you have strong, steady income, a low debt load, and a low loan amount compared to the car’s value, your lower credit score may not matter as much.
Yes, auto refinancing can have a small, short-term impact on credit score. When you apply for credit, the lender performs a hard inquiry, which may cause your score to drop. However, refinancing can also help you improve your credit score over time, especially if your new payments make it easier to make your payment on time every month.
Start by making sure all of your credit accounts are current. If you need help making payments on time, set up automatic payments or calendar reminders. Don’t get too close to your credit limit and pay extra toward your balances if you can. Don’t open or close any accounts for a while. Instead, work on paying down your debt and making timely payments. You’ll begin to see improvement in a short period of time.
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