The minimum credit score needed for a car in Canada will vary by lender. Traditional lenders (like banks and credit unions) tend to have a credit score requirement starting at 600 or 650, while online car loan providers typically have a minimum credit score requirement between 300 to 580.
Even if you have the lowest possible credit score, there are still lenders willing to offer financing, although your loan’s interest rate will be higher. Your credit score is just one of several factors car loan providers use to decide whether or not to approve you for financing to buy a car and what kind of loan terms you can qualify for.
Below is a breakdown of the minimum credit score requirements to buy a car from different Canadian car loan lenders.
| Minimum credit score | Other basic requirements | ||
|---|---|---|---|
 | 300 | Min. income of $2,000 /month, 3+ months employed | |
 | 300 | Min. income of $1,800 /month, 3+ months employed | |
 | 300 | Min. income of $1,500 /month, 3+ months employed | |
 | 580 | 3+ months employed, Max.1 bankruptcy, Ontario & Nova Scotia only |
Any score above 650 is considered to be good or excellent credit, and is generally accepted by most car loan providers as the minimum credit score needed for a car. As your score dips below 650 or 600, you may find you need to pay higher interest rates or have a harder time qualifying for auto financing to buy a car.
You can apply for your credit score by filling out an application with one of Canada’s two major credit bureaus, Equifax or TransUnion, or from other companies online. The graphic below outlines the different tiers that the credit score needed for a car loan could fall into.
A good credit score in Canada ranges between 660 up to 724. In general, credit scores can fall between 300 at the lowest and 900 at the most. Your credit score will differ slightly depending on the bureau, which means your Equifax score will probably be slightly different from your TransUnion credit score. While not set in stone, the general credit tiers are:
Finder data suggests that men aged 25-34 are most likely to be researching this topic.
| Response | Male (%) | Female (%) |
|---|---|---|
| 65+ | 2.71% | |
| 55-64 | 5.28% | 2.71% |
| 45-54 | 10.01% | 6.50% |
| 35-44 | 15.02% | 7.04% |
| 25-34 | 18.13% | 9.88% |
| 18-24 | 13.80% | 8.93% |
Your credit score helps your lender determine how likely you are to pay back your car loan on time. Their assessment of your credit score to buy a car affects whether you can qualify for financing and how much interest you’ll pay. Learn more about what interest rates you might have to pay based on what credit score is needed for a car loan in the table below.
| Credit score | Eligibility for loans | Approximate interest rates |
|---|---|---|
| Below 500 | You may have trouble qualifying for a car loan from traditional lenders if your credit score is below 500. If you do manage to get approved, you’ll likely have to pay very high interest rates | 20% to 47%. |
| 500 – 660 | Having a poor to fair credit score indicates to lenders that you’re more likely to default on your loan. You should be able to qualify with scores in this range, but you’ll pay higher interest rates. | 10% to 35% |
| Above 660 | A score of 660 is usually the credit score needed for a car loan. This score should get you approved for most types of financing with lower interest rates. | 0% to 10% |
Your credit score affects 2 different elements of your car loan application:
Yes, you can qualify for a car loan with bad credit, although it will depend on which lender you go with. Some car loan lenders in Canada have minimum credit score cutoffs as low as 300. That said, it’s likely that you’ll have difficulty getting approved for a bad credit car loan from banks and credit unions. Your best bet to qualify for financing with a low credit score is by applying with a lender that specializes in bad credit car loans, which is usually an online lender.
If you’re worried you may not have the minimum credit score needed for a car loan, the following options can help increase your chances of approval:
If you’re concerned you may not have the credit score needed for car financing based on the minimum requirements in Canada, you’re not stuck. There are strategies you can use to boost your credit score ahead of applying. These tips can help you qualify for lower rates and get approved for your next car loan:
Having the perfect credit score needed for a car loan won’t guarantee that you get approved for financing. Lenders will also want to assess these other factors:
Debt-to-income ratio (DTI) is a number that summarizes how much debt you pay per month compared to your gross monthly income. It helps lenders see how well you can manage repaying all of your debt. Borrowers with a debt-to-income ratio over 43% are generally considered to be going through a financial hardship, while an excellent debt-to-income ratio is about 20% or lower.
Let’s say you have a total of $1,000 in bills each month and your gross monthly take home pay is $3,000 – your debt-to-income ratio is 30%. With a 30% debt-to-income ratio you would appear as a relatively responsible borrower. Calculate your DTI.
Yes, financing a car can help you build credit over the long run as long as you consistently make your payments on time. Credit bureaus tend to attribute around 35% of your credit score to your payment history, so making on time car loan payments could definitely help build up your score.
Your credit score could take a small dip when you first apply for a car loan, since the lender will likely do a hard credit check during the approval process. Fortunately, credit inquiries only account for around 10% of your score, so as long as you make your payments on time, you credit score should recover quickly.
The minimum credit score for a car loan in Canada is typically 650 or above for lower interest rates. However, the lender you opt for will determine what credit score is needed for a car. For example, online lenders can often provide auto financing to buy a car for people with the lowest possible credit score of 300, albeit at a higher interest rate.
If you’re having trouble qualifying for a car loan with bad credit, you may want to improve your chances of getting approved by securing your loan with an asset or signing up with a cosigner. You can learn more about how car loans work in our comprehensive guide here.
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