More

What Credit Score Do I Need To Lease a Car?

29 Jan 2021

In this post, well discuss what credit score you need to lease a car and what to think about before deciding whether to lease or not.

If you aren’t familiar with car leasing, then you probably have a lot of questions on what credit score you need in order to lease a car. When you think about it, car leasing is not much different from other contractual agreements, such as your phone contract. You always want to ensure that you assess the situation first and research whether car leasing is really the best option for you.

 
In this post, we’ll discuss what credit score you need to lease a car and what to think about before deciding whether to lease or not.

What Do You Mean By Credit Score?

According to Equifax.co.uk, “A credit score is a tool used by lenders to help determine whether you qualify for a particular credit card, loan, mortgage or service.”
 
When it comes to car leasing, the car finance provider will commonly use a credit reference agency to help determine your eligibility for car finance. The credit reference agency uses information from your credit report and any other information that you supplied when you applied for car finance.
 
The agency will then calculate and assign you a credit score of between 300 and 850, depending on your credit history. Your credit score will then be used to show the car finance provider what kind of borrower you are and whether or not you would be good at managing your payments.

What Is Measured When Determining Credit Score?

When car finance providers are deciding whether you are in a good position to lease a car, they will take into account a range of factors. These factors will include demographic information, such as your age, income, employment history and even your living situation. The finance provider might also take into consideration your debts, previous lending history and your previous ability to make payments on time. These factors together will determine whether you have a good enough credit score to lease a car.

What Credit Score Is Needed To Lease a Car?

So, what credit score do you need to lease a car? Well, most car finance providers will want a credit score that’s either at a “good” or “exceptional” level. According to Experian, a “good” credit score can range anywhere from 670 to 739, and an “exceptional” credit score is anything from 800 to 850. However, what is classed as a “good” or “exceptional” credit score can entirely depend on the finance provider, so we recommend you do some research into which provider is best for you when car leasing.

Can I Lease a Car With a Bad Credit Score?

If you are considering leasing a car but your credit score is below the typical “good” level, you’ll likely find it difficult to get accepted finance. Some reasons you could be declined car finance are, you’ve been declined car finance in the past, you have been declared bankrupt, you have an Individual Voluntary Arrangement (IVA) or you have a County Court Judgement (CCJ).
 
On the other hand, having a low credit score doesn’t necessarily mean anything bad. You might find you have a low credit score because you’ve never had to take out a credit agreement before. This could mean that your credit history is pretty non-existent. For example, if you are considering leasing a car and you’re a young driver, you might find you’re struggling to be accepted car finance as most finance providers will only trust those who have an established credit history that can be assessed.
 
So, if you are able to improve your credit score and are interested in leasing a car, we recommend you prove your credit worthiness by paying off outstanding debts as soon as possible.

Will Car Leasing Affect My Future Credit Score? 

If Declined 

Now, will your future credit score be affected if you get declined car finance? This is likely because when you apply for credit, the inquiry will be added to your credit report. The credit inquiries on your credit report can then be viewed as potential threats to your credit score as it suggests possible risk. Therefore, it’s important that you assess whether car leasing is right for you before going ahead and applying for the car finance.

If Accepted

Alternatively, being accepted for car finance can actually have a positive impact on your credit score as it adds to your credit history. However, car leasing will only affect your credit score in a positive way if you fulfil all your payments on time in order to prove you can manage large amounts of money well.

What If My Financial Circumstances Change During My Lease Contract?

If you experience unexpected circumstances during a car leasing agreement, it’s important that you consult your car finance provider immediately to discuss the best option for you. You might have to consider terminating your car leasing contract early or even transfer the leasing contract over to someone else who can pay the outstanding balance for you. If this is not done as soon as possible, you are risking it having an even bigger effect on your credit score.

Find The Best Car Leasing Deals Here

If you have assessed your credit history and have found you are eligible for car leasing, Cars2buy has the best car leasing deals available on the market. We won’t just offer you a range of car leasing deals, we’ll also compare prices so you can find the best deal for you on a large selection of different cars. Click here to start your car leasing search or contact our leasing experts here for more information.