What is Tier 1 Credit in Auto Financing?

Tier 1 is a high credit rating for the purposes of auto financing. When different companies rate you for an auto loan, they use a series of tiers, maybe eight different levels. Tier 1 is the best level and it goes down from there, although some have Tier 1+. People at Tier 1 or 1+ pay the lowest interest rates on car loans. People in the lower tiers pay more, as much as three times higher interest rates.

Your tier level is based on several factors, but your FICO credit score is important with a score of 720 or higher helping to qualify you for Tier 1 financing. They might also consider income, past auto purchases and payment history.