Do you need good credit to lease a car?

When it comes to leasing a car, your credit history is an important consideration for lenders.  

Before signing on the dotted line, lenders need to check your credit rating for reassurance that you will make your monthly repayments. If you have a poor credit history, you may find it more difficult to get accepted for a lease agreement.       

To help you assess your eligibility for leasing a car, we’ll explain what credit ratings are and how they can affect the leasing process.     

In this guide:   

• Why do I need a credit check to lease a car? 
• Understanding credit history
• What is a credit score? 
• Do I need a ‘good’ credit score to lease a car? 
• What if I'm declined for credit?  

Why do I need a credit check to lease a car?

Your credit history can impact your ability to lease a vehicle, which is why a credit check is required before you take out a lease agreement.

When you lease a car, you enter a financial contract for a fixed period of time. Leasing providers need to know that you are a reliable borrower and will make the monthly payments for your vehicle, on time. A credit check provides them with relevant information about any debts, late payments, or discrepancies in your credit history, which they will use to guide their decision.  

Understanding credit history

Your credit history is a detailed record of how reliable you are when it comes to repaying money. Leasing providers will assess your credit report, which tracks instances where you have borrowed money in the past and provides a clear picture about your financial background. 

You can easily check your credit report via a trusted organisation such as Experian or ClearScore to assess your eligibility.     

What is a credit score?

A credit score is generated by credit reporting agencies to determine your risk as a borrower. When you apply for credit, they look at information from your credit report and application form and use this data to calculate your credit score.        

Each credit reporting agency has a different way of calculating scores as they have access to various types of information and different lending criteria.  

Do I need a ‘good’ credit score to lease a car?

Typically, drivers aiming to lease a car are advised to have at least a ‘good’ credit score. Generally, the higher the score, the more likely you’ll be accepted for a lease agreement.  Although it's not always required, it may be more difficult to find a lender who is prepared to enter into an agreement with you if your score falls below this.     

If you've had financial issues in the past such as late payments, defaults on loans or credit cards, have been declined for finance by other lenders, or declared bankrupt etc, it's likely that your credit rating will have been negatively impacted.  

However, it's important to be aware that most leasing providers don't solely rely on your credit score to judge your eligibility. They will also look at factors such as any other debts you may have and your ability to make regular payments. If they accept your application with a lower credit score, it could mean facing restrictions like higher monthly payments or an increased initial down payment.     

What if I'm declined for credit?

If your application for car finance isn't accepted, check your credit record for any potential errors. There are several factors that can affect your credit score, such as not being on the electoral roll or someone applying for credit in your name. You can appeal if you consider information in your credit history to be incorrect.   

There are also steps you can take to improve your credit rating. This won't help your current application, but it should improve your chances if you apply for a car leasing deal again in the future. In general, the best way to do this is to ensure you make any repayments on time. Over a period of time, this will help to build up your score.  

To find out more about your eligibility to lease a vehicle with us, get in touch with our friendly team today to discuss your options.  Call us on 03447451818 or contact us online.