Your credit score is a key factor in whether you get approved for a used car loan, and what terms you're offered. If your score isn't where you need it to be, the good news is that credit scores change over time. With targeted action, you can move your score into a higher tier and qualify for better loan terms. Here's what score you need, how to get there, and realistic timelines.
What credit score do you need for a car loan?
There's no single minimum, but here's how credit scores map to loan eligibility in Ontario:
- 750+ (Excellent): Approved at virtually any lender. Best rates (5–7%), lowest down payment requirements, most vehicle choices.
- 680–749 (Good): Approved at most lenders including banks. Rates around 7–10%.
- 600–679 (Fair): Banks may decline, but alternative lenders will approve. Rates around 10–15%.
- 500–599 (Poor): Subprime lenders approve at 15–22%. Down payment usually required.
- Below 500 (Credit Rebuild): Deep subprime lenders at 22–29%. Larger down payment needed.
Moving from one tier to the next — say from 590 to 620 — can save you thousands of dollars over the life of your loan. That 30-point jump might mean the difference between 18% and 13%. Even within the fair-to-good range it adds up: on a $15,000 loan over 60 months, moving from a 650 to a 700 score can mean roughly $1,500 to $3,000 in interest savings.
How to get your score where it needs to be
1. Pay everything on time
Payment history is about 35% of your credit score with both Equifax and TransUnion Canada. Set up autopay for minimums on every account so nothing slips. If you're behind on any payments, get current immediately. The longer you go without a missed payment, the faster your score recovers.
2. Lower your credit card balances
Credit utilization (how much of your credit limit you're using) makes up about 30% of your score. If your cards are maxed out, your score is being dragged down hard. Target getting below 30% utilization — if you have a $3,000 limit, keep your balance under $900. Below 10% is even better. This is the fastest-acting score improvement because it updates with each billing cycle. Two ways to move the ratio faster: if you're paid biweekly, make a small payment on your card with each paycheque instead of waiting for the statement date, so the balance the bureau sees stays lower; and you can ask your issuer for a credit-limit increase (without spending more), which lowers utilization on the same balance.
3. Dispute errors on your credit report
Pull your free credit reports from both Equifax Canada and TransUnion Canada. Look for accounts you don't recognize, incorrect late payment records, wrong balances, or outdated information. File disputes online with each bureau for any errors. Correcting a mistake can result in an immediate score boost.
4. Keep old accounts open
The age of your credit accounts matters. Don't close your oldest credit card, even if you rarely use it. Closing it shortens your average account age and reduces your total available credit. Use it for a small recurring charge and pay it off each month.
5. Avoid new credit applications
Credit inquiries may affect a credit score. If you are actively trying to improve your score, consider limiting unnecessary new-credit applications and review current guidance from the credit bureaus. Submitting the 905 Autos application does not authorize a credit report or credit check; a participating provider that needs one must obtain separate authorization and explain its process.
6. Build credit from scratch (thin or no credit history)
If your credit is very thin or you're a newcomer to Canada with no file yet, you need to build history, not just repair it. A secured credit card is the most reliable start: you deposit $300–$1,000 as collateral, use the card for small purchases, and pay it in full each month, and after 6–12 months you'll see measurable improvement. Two other tactics help alongside it: ask a family member with a long, clean card to add you as an authorized user (their positive history reports to your file even if you never use the card), and consider a credit-builder loan through a credit union. Finally, make sure your phone and utility accounts are in your name and paid on time — some of these now report to the bureaus and count toward your history.
7. Address collections accounts
Outstanding collections drag your score down significantly. Try to negotiate a "pay for delete" arrangement where the collection agency removes the account from your report in exchange for payment. Even if deletion isn't possible, paying a collection (so it shows as "paid") is better than leaving it outstanding. In Ontario, most collections fall off after 6 years from the date of last activity.
Realistic timeline expectations
Credit improvement isn't instant, but it's faster than most people think:
- 30–60 days: Paying down credit card balances can show results within one or two billing cycles.
- 3–6 months: Consistent on-time payments start building a positive trend. Error corrections and paid collections are reflected.
- 6–12 months: Meaningful score improvement (30–80+ points) is achievable with disciplined behaviour.
- 2–3 years: Major negative events (bankruptcy, consumer proposal) diminish in impact well before they fall off. A consumer proposal drops off three years after completion (or six years from filing, whichever comes first); a discharged first bankruptcy is removed six years after discharge.
Can't wait? You still have options
If you need a vehicle now, you may submit an application through 905 Autos. Participating providers apply their own criteria across different credit histories and make independent decisions. If you later accept a loan, ask the provider whether and how it reports payments; credit-score improvement and future rates are not guaranteed. We accept applications from St. Catharines, Niagara Falls, Welland, Hamilton, Grimsby, and the wider Niagara Region. Start an application.