📊 How Important is Your Credit Score for Car Finance?
Your credit score plays a key role in whether a lender approves your car loan and what interest rate you get. While some lenders approve bad credit applicants, having a higher score gives you access to better loan terms.
Understanding what score is needed for approval can help you prepare before applying and avoid unnecessary rejections.
🔢 What Credit Score is Required for a Car Loan?
In Australia, credit scores range from 0 to 1200 (Equifax) or 0 to 1000 (Experian). Different lenders set different requirements, but here’s a general guide:
| Credit Score (Equifax) | Approval Chances | Typical Loan Terms |
|---|---|---|
| 🟢 Excellent (833-1200) | Very high ✅ | Best interest rates, low fees, easy approval. |
| 🔵 Good (726-832) | High ✅ | Competitive interest rates, strong approval chances. |
| 🟡 Fair (622-725) | Possible ⚠️ | May need a deposit or higher interest rate. |
| 🟠 Poor (510-621) | Low ❌ | Rejected by most banks, but alternative lenders may approve. |
| 🔴 Very Poor (0-509) | Very low ❌ | Unlikely to be approved without a broker. |
If your credit score is below 725, many traditional lenders may decline your application. However, specialist lenders and finance brokers can help find a solution.
🚨 Why Do Some People Get Rejected Despite a Good Credit Score?
Even if you have a good credit score, you can still be declined for a car loan due to other factors, including:
🔸 High Existing Debt – Too many loans or credit cards reduce your borrowing capacity.
🔸 Unstable Employment – Casual work or job-hopping may make lenders hesitant.
🔸 Insufficient Income – Lenders assess if you can afford repayments comfortably.
🔸 Multiple Recent Credit Applications – Too many loan applications lower your approval chances.
🔸 Incorrect Credit Report Information – Errors or old defaults can still affect approvals.
If you were rejected despite having a decent credit score, checking these factors can help avoid future declines.
✅ How to Improve Your Car Loan Approval Chances
Before applying for a car loan, take these steps to boost your chances of approval:
1️⃣ Check Your Credit Report – Ensure there are no errors or unpaid defaults.
2️⃣ Lower Your Debt-to-Income Ratio – Pay off outstanding credit cards or loans.
3️⃣ Save for a Deposit – A deposit reduces lender risk and improves approval odds.
4️⃣ Limit Loan Applications – Too many applications lower your score and raise red flags.
5️⃣ Use a Finance Broker – A broker can match you with the right lender upfront, avoiding unnecessary rejections.
🚀 Why a Finance Broker Can Help If You Have a Low Credit Score
If your credit score is below 725, many traditional lenders may reject you. But a finance broker can connect you with lenders who approve car loans for lower scores.
✅ Access to lenders who accept bad credit applicants
✅ Higher chances of approval without multiple hard credit checks
✅ Options for competitive rates even if banks declined you
If you’re worried about credit score affecting your car loan approval, don’t take the risk of rejection! 🚗💨 Work with a finance broker who understands your situation and can find you the best possible car finance solution.
DISCLAIMER
The information provided on this website is general in nature only and has been prepared without considering your financial needs, circumstances and objectives and should NOT be construed as financial, taxation or legal advice. For more information, get in touch with our experienced partner brokers today.
