Does my credit score affect my finance application?
Alongside affordability, your credit history will contribute to determining whether a funder is prepared to enter a lease agreement with you. The better your credit score is, the easier you will find it to lease your chosen car.
Your credit score will reflect your history of repaying debts. Most of us will have one – whether you’ve got a mobile phone contract, have a credit card or have taken out any form of loan or mortgage. Your score is then available to prospective lenders who use the information to gauge the risk of lending you further funds.
You can also access your credit profile at any time. This is often overlooked but is something we should all do regularly as mistakes can crop up that could incorrectly affect your borrowing potential. Common mistakes include cleared debt still showing as unpaid, a debt that doesn’t belong to you, or the negative effects of identity theft.
Unlike other funding methods that adjust the cost of the finance based on the perceived risk of lending (judged by the applicants credit score), lease costs are fixed based on a credit score of good or better. Costs are kept lower as a result. If your credit score is not good or better you may want to reconsider your application as a failed application could stand to worsen your credit score and consequentially increase the cost of borrowing in the future.
To maintain a healthy credit rating you should pay off existing debts or credit regularly and on time. This will indicate that you are on top of your finances and therefore isn’t deemed a risk to funders. It is advised to regularly check and update your credit file, but particularly before applying for significant sums on finance. See our guide on how to check your credit score.
Missed or delayed payments will result in a bad credit score. You can improve this both in the short and the long term by making up what you owe and continuing to pay on time. Therefore, if you do have a bad credit score this does not mean you will always be unable to lease a car. See our guide on how to improve and maintain a healthy credit score.
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