Improving Your Credit Rating for Car Leasing

Like any form of purchasing on credit, car leasing is no exception, sometimes despite best intentions, it’s all too common to find that your credit rating might not be as good as you thought it was. 

For example, you might be associated with someone with a lower rating, or might not have had an opportunity to build up credit (typical issue for younger drivers). 

Whilst this doesn’t necessarily mean that you won’t be able to lease or hire a vehicle, this may mean that you need to revise your expectations (going for a less costly vehicle, negotiating a different deal and so on). However, there are plenty of ways to improve your credit score to secure a deal (and a better one at that!) from car leasing companies.

Clear existing debt

Clearing existing debt and outstanding payments on the card(s) you possess can help a great deal, as these could flag you up as a potential liability to the lending company if they see that payments have been made late or not at all, and they might be reluctant to allow more credit as a result. 

Build up a good score by making payments on time

In contrast to the above, making regular payments on time through a credit account will develop a good score; somewhat bizarrely an individual with no record of debt or late payments as a result of never having never used a credit card will have a worse score than someone who has, just because the other individual will be able to demonstrate that they have a good record when it comes to making payments.

Don’t max out your limit each month

Credit utilization refers to how much credit, of your available limit, you use each month. For example, if you have a limit of £3,000 and use £1000 of that, that would be credit utilization of 33%. 

Normally, using a smaller amount of your limit is a good thing, although you may need to balance this against using some of your limit to build up a good credit history.

Check you aren’t being disadvantaged by other bad accounts

Credit checks will typically look at all the accounts you have open, so even if your main financial accounts are clean, your score may be being reduced by a joint account or financial partnership with someone else having a lower rating, for example.

 If it’s possible to disassociate yourself from such accounts, as this may help considerably. 

Get on the electoral register

Not being registered to vote at your current address will count against you as this is also checked and can have a major impact on whether credit is feasible, so it’s definitely worth checking if you’re not sure. 

For the effort involved, it’s worth getting registered if you aren’t already!

Other options

Pay a larger deposit, on a lower value vehicle

Although rare, no deposit car leasing is possible to find. 

More realistically, you may be better off agreeing to pay a larger deposit to the leasing company to reflect your lower credit score. Additionally, being realistic about the type of car you want to lease is a good idea; if you can successfully keep up the payments on the initial lease period, which in itself will boost your credit score and possibly allow you to lease a more premium model next time.

Consider leasing for a shorter duration

If a shorter term car lease (3 or 6 months, for example) would suit you financially, this may help to increase your credit score more in a shorter space of time. 

It’s important to be aware though that if payments are missed, this will have the opposite effect and may decrease your score more. So, if you can ensure that you are able to foot the payments before signing up to a lease deal, even if a short lease length, you will reap the benefits by improving your overall score. 

*This is a collaborative post.