Credit scores are used to give lenders a glimpse of how a borrower might do with new credit, based on their history of repayment and other factors. The most common credit-scoring model is FICO, and it ranges from 300 to 850. With a low credit score of around 300, you may find it harder to get approved for a car loan.
Is a 300 credit score bad? A 300 credit score doesn't necessarily disqualify you from a car loan, but it does mean you have bad credit. This is the lowest of the credit scores and puts you in the deep subprime category. However, it could also mean you're new to using credit or haven't used a lot of it. This is called having a thin credit file, and it can make getting an auto loan a little tougher. However, a car loan might be possible depending on your situation.
You see, there are two kinds of bad credit, situational and habitual, and depending on why yours is low, you may not be out of the running for an auto loan. For example, if you have a thin file and are applying for your first auto loan (situational bad credit) you may find it easier to qualify than if your credit score is low due to mismanagement of past loans and credit opportunities (habitual bad credit).
Getting a car loan with a 300 FICO. When your credit score is around 300, you typically have two options for a car loan, a buy here pay here dealer, or a subprime lender.
A BHPH dealership is called an in-house lender, and they're both lender and dealer. These lots only sell used cars and may be a good option for borrowers with a 300 credit score, since BHPH dealers don't always check your credit. In lieu of a credit check lenders look to see that you can afford to take on the loan by checking your income and employment and requiring a large down payment.
Subprime lenders, on the other hand, look at more than just your credit score to determine auto loan eligibility, but they still consider it. With a low score, you can expect to work with a special finance dealership and to provide proof of income, employment, and residency, as well as proof of a working phone, personal references, and a down payment.
Start your search for a car loan with us. With a credit score of 300, a borrower isn't likely to qualify for a traditional auto loan, so finding the right lender to work with is key to getting into the car you need. Rather than looking all over town for the right lender, get started today by letting Auto Credit Express connect you to a dealership in your area that specializes in helping credit-challenged consumers.