Financing your new car purchase allows you to buy a more expensive car than if you were limited to only the cash you have available. However, not everyone gets the same interest rate, and your interest rate is usually determined in significant part by your credit score. To ensure you’re getting the best rate possible, check your credit report and score before you apply for loans so you can make sure there are no signs of bad credit habits – or worse – evidence of identity theft that can impact your score.

Prime Scores
There’s no single magic number for what credit score you need to get the best rates on a car loan. According to Cars Direct, scores over 740 could get you into the preferred interest rate zone and save you money on interest payments over the life of the loan. On the other hand, Edmunds.com cites scores of 720 or higher as possibly being good enough to put you in the top tier. Experts disagree, as experts tend to do, so make sure that you check with your lender, since each lender is different and can subscribe to different criteria.

Scoring Factors
Building your credit score isn’t something you can do overnight. Instead, it can take years to build up enough positive history to get a prime credit score. According to Experian, your score usually considers a handful of major factors, each weighted differently depending on the scoring model in use. These can include your payment history (which is usually regarded as a significant factor), your credit utilization – how much of your available balances you’re using at any given time, the length of time you’ve had each of your accounts, the types of credit you’ve used, and also the number of inquiries on your report. Different credit scoring calculations can consider different scoring factors—and weigh them differently—but these are some of the most commonly shared that help determine your credit picture.

Other Factors
Even if you have a prime credit score for getting a car loan, that’s not the only thing that a bank or car dealer sees when considering you for financing. A solid credit score is a great start, but if you don’t have the income to back up the payments, you might not get approved.According to Bankrate, you don’t want to spend more than 20 percent of your income on your car loan payment. Also, a larger down payment will contribute to getting you a lower interest rate. Finally, the shorter your auto loan term, the lower your interest rate tends to be.

Applying for Loans
When you apply for new credit, it adds an inquiry to your credit report. Typically, inquiries can impact your credit score and stay on your credit report for about two years. However, car loan inquiries are different, according to Experian. Instead of each inquiry being counted separately, all of your car loan inquiries within a short period of time can count as just one inquiry for credit scoring purposes under most scoring models. Doing all your car loan shopping in a short period of time can help protect your credit score while you’re getting quotes from several lenders.

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About the Author  
Mark Kennan is a freelance writer specializing in finance-related articles. Kennan holds a Bachelor of Arts in history and politics from Washington and Lee University. 

This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.

Published by permission from ConsumerInfo.com, Inc., an Experian company.   © 2014 ConsumerInfo.com, Inc.  All rights reserved.