What’s a Good Credit Score for Financing a Car in Canada?

By John Hayden

For most Canadian vehicle financing agencies, there’s a magic credit score number: 630. However, if you don’t make this number, there are still many other ways you can buy your dream wheels.

There are also plenty of ways you can step up your credit score relatively quickly.  Now read on to find out how your credit score affects your ability to take out an auto loan, and what fast-fix steps can quickly offset a patchy credit history.

Why do Credit Scores Affect Car Loans?

A mirror of your financial status, your credit score measures your level of financial responsibility over time. This indicates how effectively you control your budget. When you apply for auto financing, potential lenders check your credit score to see how likely you are to pay off your loan promptly.

It also directly affects the total amount you pay for your car, as lower credit scores automatically imply higher interest rates. On the upside, this means that even people with poor credit histories can still pay for their cars through monthly instalments. On the downside, they’ll pay up to five times more in interest. And over a loan term of up to eight years, this can virtually double the ticket price of any automobile.

Can I Get an Auto Loan, Even If My Credit Is Bad?

You sure can! Although it may take time and patience, there are dealerships that specialise in helping Canadians with poor credit scores buy the cars they need, at prices they can afford. However, the overall cost will be higher, to offset the increased risk of default.

Other steps you can take to speed up your vehicle purchase process include saving up for a few months for a larger down payment (with lower monthly costs), and finding a co-signer who accepts joint responsibility for the loan.

Most auto loan providers assess credit scores in the following brackets:

  • Excellent: 741 – 900, with interest of under 3% and fast-tracked approval that is almost automatic, with the most attractive conditions
  • Good: 713 – 740, with chances of fast approval, with better terms and interest rates of 3% to 4% and better terms;
  • Fair: 660 – 712, with easy approval for many car loans at around 5% or 7% interest, which is the Canadian average;
  • Poor: 575 – 659, with a more limited range of choice, and higher interest rates of up to 11%;
  • Very Poor: 300 – 574, with better chances of a loan from lenders specialising in low-score borrowers, at interest rates of up to 15% or even more.

What Can I Do to Improve my Credit Score?

The good news is that simply paying off your car loan promptly each month is helping build up your credit score. In fact, paying all your bills on time, every time, establishes a solid credit history.

If you have any bills under collection, reach settlement agreements with your creditors. Then  make very sure that you comply with their terms. A secured credit card is a good idea, backed by a cash deposit that is paid upfront (usually the same amount as your credit limit). These on-time payments add to your credit score.

For regular credit cards, all balances should preferably be paid off in full each month; at the very least strategic amounts should be settled by their due dates, often with multiple payments during the month. A good guideline is to use less than 30% of your card limit, with less than 10% even better. If necessary, ask for higher credit limits.


Improving your credit score improves your chances of qualifying for an auto loan, with faster approvals, better offers, and lower overall prices. That makes you an all-round winner!


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