Does Car Leasing Require a Good Credit Score?
Is it that time already? Looking for a new car can be an exciting prospect, lining up numerous viewings, ditching your old banger, that new car smell. What’s not to like?
Getting your hands on a brand new set of wheels is a dream come true, a car that not only meets your expectations but blows them out of the water. However, buying a car outright is, unfortunately, a luxury that not all of us can afford.
That’s where car leasing comes in. Car leasing is a long-term rental agreement that provides a means of driving the car you want, at a price and agreement that you’re happy with.
Unfortunately, securing car leasing isn’t always that simple. If you have a poor credit history, it’s not guaranteed you’ll be accepted. Read on to find out what credit score you need to lease a car and how best you can set yourself up for success.
What Credit Score Do I Need to Lease a Car?
Much like credit cards, phone contracts, loans etc. car leasing is reliant on credit scores to dictate whether you’re eligible or not. For those that have a good or near-perfect credit score, this is a piece of cake. If you’re on the lower side of the spectrum however this can make things more difficult.
What is a credit score?
The whole point of a credit score is to define a unit of measurement for how trustworthy you are in the eyes of lenders. This data is gathered from numerous sources and influenced by a host of external factors, but essentially presents how likely you are to make consistent payments.
Finance companies will refer to credit agencies for their data and to access your file. You may have heard of a few of these; Experian, Equifax and TransUnion - these are the three that are used in the UK.
A credit score is different depending on where you’re getting your information from, Clearscore, Experian etc. They all work with the same theory (even though their metrics may differ slightly). Using Experian as an example ranges from ‘very poor’ to ‘excellent’ and rates your credit score out of 999.
What credit score do I need?
Whilst there is no clear-cut score your credit needs to be in order to be accepted, the general rule of thumb is the higher the better. You have a much higher chance of being accepted for car leasing when you have a ‘good’ or ‘excellent’ credit score, while poorer scores may struggle.
Although Experian customers starting a new lease during the third quarter of 2019 had an average credit score of 725 (good), 22% of new car leases went to customers with scores below 660 (fair and below).
It’s definitely best to aim for ‘good’ or ‘excellent’ when looking to secure finance, simply because you are deemed as more reliable and therefore more likely to be accepted. It’s also important to understand that credit score isn’t the only thing lenders look at, any debts and your likelihood to make repayments is also taken into consideration.
What if I’m Declined for Credit?
If you have been declined it isn’t the end of the world, there are many options at your disposal. While being declined for credit is of course not ideal, there are still other routes you can take to secure credit.
Appeal the decision
The information lenders use is provided by credit reference agencies that store everything from missed payments, debts, applications for credit. If you’re under the impression that some of the information is incorrect, then you’re in luck - it’s possible to appeal the decision to decline your credit application.
Using companies that provide a credit report such as Clearscore you’re able to see a clear breakdown of your score, the positives, the negatives and all previous payment information. By reviewing this information you can then flag anything that looks wrong and your information will be amended.
This would be your first port of call if you’re unsure as to why you’ve been declined.
How do I improve my credit score?
Improving your score is not a quick fix and will certainly not happen overnight. Especially if you’ve caused long-term damage to your credit score, it can take months, even years to start to revert the negative.
While improving your bad credit score cannot and will not happen overnight there are some ways to get your foot in the door to better credit.
- Apply for the electoral roll
- Make payments in full and on time
- Consider using savings to pay off any debt
- Utilise under 30% of your available credit
- Avoid making any hard enquiries
It goes without saying that making payments reliably, not missing any of your direct debits is the key to making serious changes to your credit score.
A lot of these suggested changes to your credit can also positively impact your financial health and wellbeing, leading to happier and less stressful home life.
As mentioned previously, making serious movement on the credit score front takes a lot of time, effort and consistency - but the time it takes can drastically change from person to person based on a bunch of factors.
How long does it take to fix my credit score?
There is no conclusive answer to how long it takes to fix a bad credit score, this can differ considerably from one person to the next. The time it takes to improve your credit score is very much dependent on how bad it is in the first place, your payment history, among other factors.
Negative information on your credit report can stick around for 7-10 years depending on the damage. Of course, you can be doing work in the background to make positive changes to your file, but with one missed payment being visible for 7 years it’s pretty much just a waiting game.
Much in the sense that when you have an accident or speed your car insurance premiums go up. After so many years the information gets wiped from your file, this same concept can be applied to your credit score.
Is this the end of the road?
Being declined for credit is at the least very disheartening, but it does not mean you are out of options. We understand it may seem that way, but we can assure you there are other ways of driving that car you’ve been admiring for the last few months.
There are a few options at your disposal:
Improve & come back
Build your credit score and come back. Depending on the severity of the negative outsets on your report, this can vary. If your score was just out of reach, spend the next 6 months or so reliably making payments, utilising less credit, paying off debts etc. and try again.
Specialist lenders
If your credit score is teetering more on the side of ‘bad’ or ‘very poor’ this may not be the case. However, luckily for you, there are specialist lenders out there that are designed to help people exactly like you.
So to answer the question, does car leasing require a good credit score? Not always.
How long does it take to fix my credit score?
There is no conclusive answer to how long it takes to fix a bad credit score, this can differ considerably from one person to the next. The time it takes to improve your credit score is very much dependent on how bad it is in the first place, your payment history, among other factors.
Negative information on your credit report can stick around for 7-10 years depending on the damage. Of course, you can be doing work in the background to make positive changes to your file, but with one missed payment being visible for 7 years it’s pretty much just a waiting game.
Much in the sense that when you have an accident or speed your car insurance premiums go up. After so many years the information gets wiped from your file, this same concept can be applied to your credit score.
Is this the end of the road?
Being declined for credit is at the least very disheartening, but it does not mean you are out of options. We understand it may seem that way, but we can assure you there are other ways of driving that car you’ve been admiring for the last few months.
There are a few options at your disposal:
Improve & come back
Build your credit score and come back. Depending on the severity of the negative outsets on your report, this can vary. If your score was just out of reach, spend the next 6 months or so reliably making payments, utilising less credit, paying off debts etc. and try again.
Specialist lenders
If your credit score is teetering more on the side of ‘bad’ or ‘very poor’ this may not be the case. However, luckily for you, there are specialist lenders out there that are designed to help people exactly like you.
So to answer the question, does car leasing require a good credit score? Not always.
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Which Car Leasing Option is Right for Me?
So let’s imagine you’ve been accepted for credit, what’s next? Picking your car.
It’s understandable that once you’ve gotten past the whole car leasing credit score saga you’d just want to get in your car and drive away. But there are a few important things to consider, especially regarding price to take into account before you do that.
What’s your budget?
How much can you afford a month? Although spending more a month can help you get your hands on a better set of wheels, it’s important to assess your financial health and what’s best for you.
Especially when discussing the credit score needed to lease a car, if you’re interested in any way to build your credit score to an acceptable level you need to make sure you choose a car lease you can afford. When searching for car lease deals, you can apply filters to the search bar to only search for deals within your budget. Missing payments is going to have a negative impact on your credit score and set you back to where you started.
On top of the car leasing payments, you need to incorporate other costs, such as running costs, insurance and tax. Consider these additional costs when looking at the monthly lease cost.
When considering any type of credit it’s essential to look at your overall finances, do you have any outstanding debt which would affect your ability to make repayments? Do you have savings to cover any unexpected expenditures? Is your income stable?
Planning ahead with your money and considering such events is smart when considering car leasing, especially when wondering whether your credit score is eligible.
Secure & Affordable Car Leasing
If you’re wondering whether car leasing is for you check out our car leasing FAQs and our handy guide on the benefits of car leasing. Alternatively, to find out more simply get in touch to speak to one of our personal advisors.
If you’re curious as to what cars we have available, browse our range of personal car leasing deals. We’re confident we’ll have something to catch your eye, and without the worry of your credit being detrimental to your application.
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