What is Tier 1 – 2 credit?

Woman looks at a credit score

Credit Tier Definition and Effect on Payments

If you’ve been looking at financing or leasing a new vehicle, you’ve likely seen offers that require “tier 1 – 2 credit.” While you probably have a general idea what that means, customers often ask us here at Carl Black Orlando about the specifics. What exactly does the phrase, “tier 1 -2 credit” refer to?


Credit tiers are labelled in different ways by different lenders; often, however, the labeling is done in terms of Tier 1, Tier 2, and Tier 3. In such situations, Tier 1 is the top level, typically referring to a credit score of at least 700, or sometimes a minimum score as high as 750. Basically, this tier encompasses borrowers with the best credit scores.

Tier 2 typically ranges from a credit score of about 660 up to the lender’s Tier 1 level. Tier 3 generally starts in the low 600s. If you’re under 600, you’re considered a “subprime” borrower.

Find out what rates you qualify for by filling out our financing pre-approval form!

Man checks his credit score on his phoneAre credit tiers labeled in other ways?

In addition to this numeric system, credit tiers are sometimes labeled using letters or other designations. In all systems, the credit tier refers to the range of credit scores that qualify car buyers for different rates.

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How much impact does my credit tier have on the cost of my vehicle?

Interest rates can vary quite a bit based on credit tier, which in turn can have a substantial impact on the cost of a vehicle; a higher interest rate will add thousands of dollars to the price tag.

See how much you can expect to pay with different interest rates using our payment calculator.

What is my credit tier based on?

The credit tier that one falls into is typically based on one’s FICO credit score, which is a three-digit number between 300 and 850. The FICO score is based on one’s past history of borrowing money and paying it back on time.

If you haven’t borrowed money before or have a history of missing payments, or you have a substantial level of existing debt, you’re considered a higher risk. As a result, you’ll likely have a lower (or nonexistent) FICO score and thus fall into a lower credit tier.

Posted in FAQs, Finance