Having a good credit score is an extremely important factor when leasing a car. When you have a great credit score, you can easily determine the way in which the auto lease deal that you accept and the payments that you make are decided by the car dealership. Car dealerships will always offer the best rates to those that have had a great credit history rather than to those that have an average or bad credit history. They will charge a higher rate of interest or money factor on the lease to those with bad credit histories in order to make up for the risk of non-payment.
If you have absolutely no credit history or not enough credit it can certainly diminish your chances of even qualifying to lease at all. With a good credit history, you can be sure that you will be able to save hundreds of dollars on the total you will pay by the end of your lease.
A Good Credit Score is Absolutely Essential
When you apply to lease the car at the dealership, your personal details will be taken. After this they will perform some statutory background checks and chief among them is running your credit to obtain your credit score. This 3 digit number has a lot of importance in other areas of your financial dealings as well. Your credit score can affect your ability to purchase property, land and other movable and immovable assets as well.
Higher credit scores mean that you are a highly responsible person and a non-risk person. The financial institutions will happily give loans to the most secure customers that have a high credit rating. Once the car dealership has had a look, it’s their choice to grant or refuse the lease deal. If the credit score is good, then the payments will be lower. However, if the credit score is really bad, the payments will zoom up.
The Factors That Makeup The Credit Score
There are many factors that constitute your credit report. These include the banks, insurance agencies, investment agencies, credit card agencies, employers, cell phone carriers and even lenders. When you have accounts with such financial agencies, your credit rating will be automatically calculated. If you make late payments or have defaulted on the payments, or are facing foreclosure etc., the same is reflected in the credit score that you have. Even when you open an account for the first time, you will be asked for your credit report.
Some of the ways in which you can increase your credit score is by making the payments of the bills on time, using fewer credit cards, making the credit card payment in full each month, starting young etc.
You also need to be aware of the credit score that you have. There are 3 credit-reporting agencies known as Equifax, Experian and Trans Union. You can request your credit scores from them. The highest score is 850 and this score is known as the FICO score. If you have a score of 800 and above, you are considered to be a very good customer. Those who have a score of 750 and above are also known as good customers. But generally a score of 720 or higher would qualify you for the best interest rates available.