What Credit Score Is Needed to Lease a Car?
Know Your Credit Score
Before you visit any dealership and ask what credit score to lease a car is best, find out what your credit score really is. Many people have a general idea of where they fall on the credit scale, but a few points up or down can mean a lot as far as what is a fair or good score.
First, skip the ads on the Internet and the television that offer free credit reports and scores. You will get one free credit report with a score from these companies, but you will also need to provide a debit or credit card to join their monthly credit repair or reporting service.
Instead, the Federal Trade Commission (FTC) offers a 100% free credit report from all three credit bureaus; TransUnion, Equifax, and Experian along with your credit score. You can apply online or mail in a request for the report so don’t spend money on what you think is free and will actually cost you a lot of money in monthly fees you agree to pay to other sources once you sign on the dotted line.
The Credit Score Scale
Often, depending upon the where the economy falls, lenders look at credit scores differently. A lease finance company may decide that a low-end good score may be an acceptable risk in a bad economy but in a flourishing economy, they may want the credit score to be in the good to excellent range to lease a car.
On the average, however, the credit score range is:
- Poor: 500 to 580
- Fair: 581 to 650
- Good: 651 to 700
- Excellent: 701 to 800+
Any score lower than 499 is considered a bad credit score.
Keep in mind that the economy can make this scale fluctuate and so can things you do yourself. For example, if you want to learn what your credit score is to lease a car and have many dealerships run your credit report over and over, or choose a credit score service to run your report, each time your credit report is run, you score falls by one point—no matter who runs it. This is not true for the free FTC credit report, however.
Beware of anyone that tells you by running your credit report your score will not decrease by one point, because it will. Because leasing a car means you should be a good or excellent credit risk, if you fall in the good range right at 651 and have your credit report run over and over, you could fall to the fair range in no time at all.
Leasing a Car & Your Credit Score
If you want to know what credit score you need to lease a car, the answer may depend on a few things, but for the most part, your credit score should fall between the Good and Excellent range on the scale above.
Other factors that help you lease a car are your past history on vehicle payments, housing or rent payments, and if you make timely credit card payments. All of these show on your credit report and if you have defaulted on a car loan in the past, even if your other payments have been on time, a lease finance company may deny you the ability to lease a car based on that default.
Lease finance companies that work with dealerships to help people lease cars, also take into consideration if you can make the down payment needed and also look at your debt to earnings ratio to see how much ready cash you have available once your monthly obligations are met. If they feel your debt to earnings ratio is too high, even if you have a good credit score, again you may be denied.
The best credit score to lease a car is either an excellent score or one that falls on the high side of the good scale and also have a credit report that reflects you do pay your monthly obligations on time.
In addition, it can take some finesse on the dealership side as far as arguing your case to the lease finance company.
Car leasing is becoming more and more popular for people who want to get into a new car ever two to three years, but when it comes to what credit score to lease a car is best, first to know your score, look at your credit report for any errors or mistakes, and if your credit shows a good payment history, you will more than likely be able to lease the car you want if your score falls in the accepted range.
Image Credits:
- 2011 Ford Mustang (Ford Media Room - https://www.media.ford.com)
- 2011 Ford Fiesta (Ford Media Room) - https://www.media.ford.com)
Jean Scheid is a registered user of Ford’s Media Room
