What Credit Score Do You Need to Lease a Car?

By Diana Kelly Levey · September 20, 2021 · 5 minute read

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What Credit Score Do You Need to Lease a Car?

When you’re thinking about buying a car, you’re probably taking a look at your financial snapshot—from the cash you have available to your debts and your credit score. Determining your credit score to lease a car is an important component of leasing a car—particularly if you want to save money!

Here, you’ll learn about the credit score needed to lease a car, the minimum credit score to lease a car, and find out the answer to the question, “Do you need good credit to lease a car?” Before you decide to lease a car instead of buying a car, it’s good to know how that decision will impact your finances and your credit.

What Are Car Lease Requirements?

It’s a good idea to know your credit score before you start shopping around because your credit score is an important factor influencing the final lease amount. If you have poor credit and only have $300 a month to spend on the lease and insurance, a lot of that amount might be going to the higher interest rate a lender could potentially offer you.

Whereas if you have good credit and $300 a month to spend on the lease and insurance, you may be able to lease a better quality car for that money since not as much will be going to interest payments. (It’s always a good idea to weigh the pros and cons of leasing vs. buying a car before pulling the trigger on either financial decision.)

When you’re thinking about do you need good credit to lease a car, the answer is yes, having good credit may make it easier to lease a car because a leasing company may not see you as financially risky as they might as an individual who has bad credit. Not all leasing companies will approve a car lease for someone who has bad credit.

You might also need to prove that you have a job with a certain income when you’re leasing a car, show recent bank statements, or that you have a co-signer with a good credit history.

The average credit score of people who leased cars in mid-2020 was 729—generally in a good credit score range. If you have excellent credit, the upfront costs of leasing a car might be lower than if your credit isn’t so great. Typically, leasing a car might require the first month’s payment, a security deposit, taxes, registration, and an acquisition fee. Someone whose credit score is in the low 600s might need to put money down on the lease in addition. Keep reading to find out more about how different credit scores affect leasing a car.

Recommended: Leasing vs. Buying a Car: What’s Right for You?

Leasing With a Credit Score Above 680

The credit score to lease a car and get favorable rates is one that’s considered a “prime” or “good” credit score. Having good credit typically makes it more justifiable for lenders to approve you for the lease because it’s less of a risk to them.

Just as with any type of financing, applicants who have good credit may be offered lower interest rates on auto leases. Having an above-average credit score could give you more negotiating power over the rates and terms of the car lease.

Leasing With a Credit Score Lower Than 680

Having a lower credit score means you’ll likely have difficulty finding a company willing to lease to you or you’ll pay more to lease a car. Leasing companies may see you as a risk-based on your credit history. You might find that having a trustworthy co-signer on the lease could help you get a lower interest rate or better terms than if you’re applying on your own.

If your credit score is lower than 680, you might want to work on raising it before leasing a car so you get a better deal. A good place to start is by checking your credit report . It’s important to check your report for accuracy—if there are any errors, contact the credit bureau that issued the report. Factors that affect your credit score are your payment history, length of your credit history, how much you owe compared to how much available credit you have, types of credit you have, and any new applications for credit that show up on your credit report.

Recommended: Is it Smart to Buy Your Leased Car?

Can Leasing a Car Build Credit?

Any time you apply for credit, you have the opportunity to build your credit. A car lease is credit just as a car loan would be credit. How you manage your lease payments affects your credit report just as a loan would. Making regular, on-time monthly payments will affect your credit in a positive way. Missing payments or being late with payments will hurt your credit and may negatively affect your credit score.

Can Leasing a Car Affect Your Credit Score?

You may see a small drop in your credit score when the lease begins because your credit report will show a new account is open. You may see a similar small drop when the lease is terminated because the account is closed. Both of these credit events—opening and closing a credit account—can affect your credit score.

If you’re shopping around at different leasing companies over the course of a few weeks, and apply for leases at those places, there will be inquiries into your credit history by the leasing companies. However, those multiple inquiries should show up as just one inquiry on your credit report and minimally affect your credit score.

Recommended: Smarter Ways to Get a Car Loan

The Takeaway

It’s important you know your credit score to lease a car before you go car shopping. Checking your credit reports in advance will uncover any surprises before you’re at the dealership. Knowing your credit score and working to improve it as much as possible before applying for a car lease may help you save money on your car lease and give you more negotiating power. The less you have to spend on interest and fees, the farther your money can go while leasing. If you’re happy with your leased car and it makes good financial sense for you, you may even decide to purchase it at the end of the lease.

Using an online banking app like SoFi Checking and Savings® can help you save, spend, and earn all in one place. And using the SoFi Relay app can help you track all of your accounts, make it easier to meet your financial goals, and keep tabs on your credit score.

Learn more about SoFi Checking and Savings.

Photo credit: iStock/dusanpetkovic

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