Is A Credit Check Necessary to Purchase A Car?

When you walk into a dealership to buy a car, or approach your bank for auto financing, chances are they will be pulling your credit score to see what kind of borrower you are before they approve a loan, or quote you an interest rate. Credit scores, or FICO scores, are one of the primary tools used by lenders to try to assess the likelihood of your default on a loan, and whether you will make timely payments if they extend credit to you.

The credit bureaus keep an invisible paper trail of all of your account activity when it comes to credit and loans. When you make a payment on your credit card, or open a new account, this information is reported to the credit bureaus and added to your credit report. If you default on an account, or if you are habitually late on your payments, that is reported to the credit bureaus as well. Your three digit credit score is a summarization of the information on your credit report, and helps lenders to see at a glance what sort of history you have had with credit.


Of course, if you have cash in hand to buy a car, then you won’t need a credit check. But if you are looking for any sort of financing, someone will almost certainly be pulling your credit file and using your credit score to assess your risk and decide how much to charge you in interest. They will also look at your credit reports, how much revolving debt you have on your credit cards, and whether you pay your bills on time. Bad credit won’t completely disqualify you from getting an auto loan. But the better your score, the better your interest rate will be. Before you purchase a car, it’s a good idea to get a copy of your credit report, clean up your credit and make sure you are presenting the best possible credit score to prospective lenders.