Have you leased a vehicle before? Wondering if it will affect your credit score? If you are, we hope to answer some of the questions and queries you have about the process down below! Does vehicle leasing affect your credit score?
Credit Scores… What Are They and What Do They Mean for You?
A credit score is a three-digit number that shows how likely you are to be accepted for credit agreements. The long and short of it is- the higher your credit score, the more likely you are to be accepted.
Experian is one of the UK’s largest credit reporting agencies. Experian, says scoring between 881 and 960 is considered ‘Good’ and anything between 961-999 is considered ‘Excellent’.
There isn’t an official minimum credit score for a lender to accept you for a credit agreement to lease a vehicle. If you are refused for a vehicle finance agreement, it can negatively affect your credit score.
Although, having a lower score means you are at more risk to the credit company- so you are less likely to be accepted and it could mean your payments are increased.
Don’t worry! If you enter a credit agreement and keep up with all the payments, then your credit score actually improves. This is because you have proved to the company that you are a responsible customer.
This doesn’t just improve your ability to enter into vehicle leasing agreements- it means that you will get better deals on other payments in the future- such as: mortgages, insurance premiums and credit card interest rates will be given to you at improved rates.
Low Credit Scores…
If you have a low credit score, it can be tricky to enter into a vehicle leasing arrangement. If you have previously been declared bankrupt, have a County Court Judgement (CCJ), or have entered into an Individual Voluntary Arrangement (IVA)- you are unlikely to be accepted for vehicle finance.
A low credit score doesn’t always mean any of this though- it can simply mean that you have little experience of credit agreements.
If you don’t know your credit score, you can find out here
What Happens if Things Change?
Before making any decisions on your vehicle finance agreement, seek advice on the options that are available to you.
In some cases, the contact can be transferred over to another person to take over the outstanding finance agreement.
Some credit agreement lenders may allow for a guarantor to be added to the agreement. This means if you default on any payments, they will be liable for the payments.
A guarantor will normally be a family member and must be 21 or older and have a good credit score.
Van Monkey Options
Vehicle leasing isn’t for everyone. However, it is an way for you to get a newer, more efficient vehicle and improve your credit score for other agreements in the future.
At Van Monkey, we also offer asset finance as an option for you- this can be hire purchase and more. There’s a simple tool and it only takes 60 seconds to use. Click here to see check if you are eligible!
And you can find out more about our vehicle leasing agreements at Van Monkey here
Thank you for reading, we hope to see you soon!