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Can I get a car loan with a 556 credit score?
My credit score is 556, but I’ve been working toward building it after it fell to the low 400s. My only problem is that I need an installment loan to further increase it. I was thinking of getting a car loan. Can I get approved for a car loan if my credit score is 556?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
A 556 credit score is in the subprime range, but you can still get a
car loan
if you know where to look and what to do.The first thing you should do is attempt to boost your credit score by:
- Paying off high-interest debt
- Squaring up any delinquent accounts
- Lowering your credit utilization ratio
If you can successfully accomplish these tasks, you should see an increase in your credit score. At this point, you may still need to work with a lender who specializes in bad credit car loans. Third-party lenders, online lenders, and even some credit unions offer this type of financing.
If you can’t find approval at these places, you might want to try a buy here pay here dealer. These dealerships offer in-house financing to buyers with poor credit. The interest rates will be high, but if you can pay on time, it will boost your credit. After a year or two, refinance the car with an improved credit score.
When time is of the essence, you can also find a cosigner. Ask a friend or family member with good credit to cosign for the loan, and you will drastically improve your chances of approval. Note that if you miss a payment or fail to pay, the cosigner’s credit will fall. Pay on time to avoid any fallout with a loved one.
Hopefully, one of these options gets you the car loan you need. But don’t forget about car insurance. Lenders will require full coverage car insurance, so you should budget accordingly and shop around for the best rate possible with the
Jerry
app.Jerry is a licensed insurance broker that will collect quotes from over 50 top-rated insurers in minutes. After you find a great rate, Jerry can help you buy new insurance and cancel your old policy. Users save an average of $887 per year.
View full answer
- Gregory R.
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