When you apply for a car lease deal, you’ll undergo a credit check to make sure you’re able to make your monthly payments. But what credit score do you need to lease a vehicle?
In this guide, we’ll walk you through leasing and credit to help you find the perfect car lease whatever your credit rating. We’ll discuss why your credit score is checked and what it entails.
Why Do I Need A Credit Check To Lease A Car?
Credit checks are used to check how likely it is someone is going to be able to make agreed payments. In the case of leasing, a check is used to see if you’re a reliable borrower and ensure you’re likely to make your monthly payments towards the vehicle.
What Is A Credit Check And What Does It Involve?
When a credit check is carried out, a credit report is created on you which looks at a history of your financial situation. It can be thought of as a CV for your money and is filled with information on your financial situation.
There are two types of credit rating, a hard and a soft check which will look at some or all of the following:
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Your personal information including DOB, contact information, etc.
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Whether you’re on the electoral roll.
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How much you currently owe lenders.
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Any late payments on current and previous credit cards and/or loans.
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Missed payments on current and previous accounts.
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Any County Court Judgments (CCJs).
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Any repossessions.
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Any house moves whilst owing money.
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Declaration of bankruptcy.
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Any Individual Voluntary Arrangement (IVA).
These factors are used to decide whether you’re a reliable person for a lender to give money to to confirm you’re likely to make repayments.
What’s A Soft Credit Check?
A soft credit check reveals selected information about your credit history. It doesn’t impact your credit score and is used to check your identity and provide basic details which will suggest your eligibility.
What’s A Hard Credit Check?
A hard check looks at your entire spending history and includes all the points mentioned above. Before taking out your lease, you’ll have a hard credit application to guarantee you’re likely to make your leasing payments.
A hard credit check will stay on your report for one to six years so it’s worth limiting your number of checks.
How Long Does A Credit Check Take?
Usually, a credit rating is pretty quick, with the majority of financial information being gathered automatically after you submit it. The longest part is waiting for someone to manually check your credit report to make a final judgement.
It will usually take a day or so but could be up to five days, especially during a busy period or over a long weekend.
Can I Lease A Car Without A Credit Check?
In short, no, you’ll need a credit check when leasing a vehicle from a leasing company including Vanarama. Some lease companies may offer this, however, the BVRLA (British Vehicle Rental and Leasing Association) states lease brokers should follow the FCA (Financial Conduct Authority) rules, which include credit and affordability checks.
What Credit Score Do I Need To Lease A Car?
You will generally need a fair to good credit history to lease most vehicles, however, there’s no set score. Each lender has its own criteria for who they’re happy to lend to with their own maximum and minimum credit score.
The higher the score, the more likely you’ll be accepted for a lease agreement. But don’t worry, we work with 10 different finance companies and endeavour to find the perfect lease deal to suit every individual.
Why Do I Need A Good Credit Score To Lease?
If you have a higher credit score, you look more responsible to a finance provider and are more likely to make your monthly payments. This means the lender is more likely to give vehicle finance to someone who seems likely to make payments.
What Happens If You’re Declined Finance?
Each finance company has their own scores and criteria you should meet for a credit agreement. If your score isn’t high enough due to a lack of credit or spending, CCJs, payment defaults, bankruptcy or missed payments, you may be rejected.
Being rejected doesn’t hurt your credit score, however, it can be impacted by the check itself. This shouldn’t last long but it’s best to avoid taking too many credit checks in a short time.
If you are rejected, you can look at other options which we’ll discuss next such as lowering the lease deal you’re looking at or paying more upfront.
If you have been rejected, contact us for more information and we’ll help guide you through finding the right lease deal for your new car.
Can I Lease A Car With Bad Credit?
If you have a bad credit score but want to lease a car, you do have several options available.
These include:
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Choose a short-term lease - leasing for a shorter period can increase your chances you’ll be accepted.
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Pay more upfront - increase the initial payment to lower the amount you’re borrowing.
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Choose a cheaper vehicle - you may be able to increase your chances of acceptance by lowering the value of the vehicle.
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Use a co-signer - some finance companies will let you co-sign a lease, however, this will depend on the company.
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Improve your credit - work on improving your credit score to improve your chances of being accepted.
For more on this, take a look at our guide on how car leasing with bad credit works.
Where Can I Check My Credit Score?
You can get a free-of-charge credit check from a Credit Reference Agency (CRA) including Experian®, Equifax, ClearScore and TransUnion formally known as CallCredit. Each has a different scoring system but can give you a guide to what your credit report looks like.
Does Car Leasing Affect Your Credit Score?
Yes, car leasing can have a positive effect on your credit score as long as you make your monthly payments. Making on-time payments shows you’re financially responsible and will help to build credit.
If you don’t make payments, your score could be negatively impacted. If you’re struggling, please contact us to discuss your options.
When you take out a car lease, your credit score may initially be impacted. This is because whenever a hard check is done, your score will drop slightly. Don’t worry though; your score will quickly improve again once you start making payments.
