How To Get A Car Loan With A 720 Credit Score

If you are looking for a car loan with a credit score of 720 or higher, you are in a strong position. A credit score of 720 is considered good by just about all lenders. But even though 720 is a high enough credit score to get a car loan, you may be able to cut costs and save money if you can improve your credit score before you apply.

Here are the steps you can take to maximize your credit score and shop around for the best car loan.

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Check your credit report

Before you apply for a car loan (or even if you choose to use a personal loan to buy a car), make sure your credit report is accurate. Many people find mistakes on their credit reports, and some mistakes can lower your score. You don’t want to find yourself stuck paying a higher interest rate just because of a mistake.

You can get copies of your credit reports from the three major credit bureaus by visiting If you find any inaccurate details, follow the agency’s online process to request corrections.

Check your credit score

There are many ways to check your credit score for free:

  • Free Credit Score Website: Several consumer websites and financial institutions offer free credit scores online. These are usually VantageScores.
  • Free FICO score from your bank or credit card issuer: Some banks and credit card companies, including Bank of America, Wells Fargo, and Citi, offer free FICO scores to their credit card holders when they log into their account online. Discover offers a free FICO score to everyone, even if you don’t have a Discover account.
  • Free FICO Score from a Credit Reporting Agency: Experian offers free FICO scores to anyone who signs up for an account (free or premium).

If you check your credit score in more than one place, don’t expect the scores to be all the same. Indeed, your score may vary depending on the agency that calculates it and the model (FICO or VantageScore) used. To make things even more interesting, there are several versions of FICO and several different versions of VantageScore. So don’t worry if you see a range of scores.

The main reason you need to familiarize yourself with your score before applying for a car loan is that you may be able to improve it before you apply. A credit score of 720 is close to the excellent credit range, but not quite there.

Virtually all free credit scores contain information about factors affecting your score. If, for example, your credit score is affected by your credit utilization rate (how much revolving debt you have against the credit limit on your credit cards), you can call your credit card issuer and request a limit increase. As long as your balance does not increase, the higher credit limit can improve your score.

Shop for the best loan

Here is an overview of the steps to take when applying for a car loan.

Apply to multiple lenders

Apply to at least two or three lenders (or many more, if you want) to compare the terms. Make sure that when you apply you are asking to be pre-approved for the loan (not pre-qualified). This means that the lender will verify your personal information and perform a credit check.

Discover the limits of lenders

Some loans are only available for the purchase of a car from a certain dealership or manufacturer. Some loans are reserved for used cars, others for new cars. Most pre-approvals have an expiration date. Make sure you know the limits associated with any loan you apply for.

Apply within 2 weeks

Normally, each time you apply for credit, your score may drop a few points. The exceptions are when you apply for certain types of credit, including auto loans. Credit rating agencies understand that you need to apply to multiple lenders to compare offers, so they all give you a rate buying window. During this window, all auto lender claims will count as one serious claim against your credit score.

Auto loan applications are completely ignored by FICO for 30 days. Then, the rate buy window is between 14 and 45 days, depending on the rating model used. Lenders have to pay for rating models, and not all of them are upgraded every time a new one is released. Since you won’t know what score a lender will use, it’s best to apply for and compare loans within 14 days – the smallest rate buying window – just to be sure.

Consider a variety of lenders

Remember to check with the dealer in addition to any banks, credit unions, or online lenders that you are considering. Sometimes the dealer will be willing to match or beat any finance offer you come up with. It is delicate territory, however. Car dealerships have been known to add unwanted costs to your contract, such as prepaid maintenance or additional insurance coverage.

Shop below your loan amount

All cars require maintenance and fuel (gas or electricity), plus you will need to pay taxes and registration fees. And then there is auto insurance. So remember that the loan is not the only item that you will add to your budget. When deciding how much car you can afford, keep these other costs of ownership in mind.

Protect your credit

An auto loan will not contribute to your credit utilization rate because it is based on revolving credit. But it will play an important role in:

  • A healthy mix of credit (the types and variety of credit you use)
  • Your payment history (the most important factor in your credit rating)
  • Your credit age (after you pay off your car loan in good standing, it will continue to have a positive effect on your credit score for another 10 years)

That’s why it’s important to handle a car loan responsibly and know what you’re getting into before you take one.

About Joan Ferguson

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