{"id":35,"date":"2021-10-29T09:59:03","date_gmt":"2021-10-29T09:59:03","guid":{"rendered":"https:\/\/findanewcarnow.com\/blog\/?p=35"},"modified":"2021-11-02T20:34:45","modified_gmt":"2021-11-02T20:34:45","slug":"does-car-lease-affect-credit-score-leasing-or-buying-a-car","status":"publish","type":"post","link":"https:\/\/findanewcarnow.com\/blog\/does-car-lease-affect-credit-score-leasing-or-buying-a-car\/","title":{"rendered":"Does Car Lease Affect Credit Score? (Leasing Or Buying A Car)"},"content":{"rendered":"

Just like anything else that might require a monthly payment, such as a mobile phone contract or a credit card bill, a car lease contract will also have an effect on your credit score – which is why it\u2019s so important to make sure that a car lease is within your budget <\/span>before <\/span><\/i>signing the dotted line.<\/span><\/p>\n

Even though the thought of having to make monthly payments can seem a little off-putting, especially as car leasing repayments can sometimes be costly, so long as you\u2019re within your means to comfortably make the payments on time each month, you might even see your credit score slowly creeping up!\u00a0<\/span><\/p>\n

If you\u2019re currently considering taking out a car lease but you\u2019re on the fence, then this article is for you. To help you understand how taking a car lease out might affect your credit score, we\u2019re going to be talking you through everything you need to know below so that you can make a more informed decision. So, whenever you\u2019re ready, let\u2019s jump right in.<\/span><\/p>\n

How Can A Car Lease Deal Impact Your Credit Score?<\/b><\/h2>\n

First things first, before you head down to the dealership and fall in love with a brand new car – you should first take the time to fully understand how taking out a car lease deal can potentially impact your credit score. <\/span><\/p>\n

To cut a long story short, taking out a car lease deal can impact your credit score in a variety of different ways, so it\u2019s essential to make sure that you are opting for a car that is entirely within your budget. <\/span><\/p>\n

If you don\u2019t stick to your budget and ensure that you\u2019re comfortable going to be able to repay the monthly payments, not only will your credit score be negatively affected, but you will also risk losing the car entirely.\u00a0<\/span><\/p>\n

Needless to say, if you\u2019re confident that you\u2019re going to be able to make repayments and are going to opt for a car that is within your budget, then you might even see a positive effect on your credit score – as regular, monthly repayments prove that you are a reliable lender that is able to manage their money. <\/span><\/p>\n

In addition to this, it\u2019s also worth noting that the <\/span>length <\/span><\/i>of your car lease will also greatly affect how much your credit score improves if you are able to ensure consistent repayments that are on time. <\/span><\/p>\n

For the most part, longer car leases with a lower monthly repayment that extend for at least 48 months or longer tend to see a slower increase in credit score. However, while this may be the case, it does also mean that an accidental missed payment might not have such a huge effect on your credit score\/credit file history.\u00a0<\/span><\/p>\n

On the other hand, if you happened to take out a shorter lease with a higher monthly repayment amount, then it is important to keep in mind that, while it might potentially boost your credit score significantly if you happened to miss a payment for whatever reason, then you would more than likely see a noticeable decrease in your credit score. <\/span><\/p>\n

With all of that being said, it\u2019s important to consider the length of the car lease you decide to opt for, as it is generally recommended that the best route is to go for a more affordable monthly repayment over a longer period of time, as it means that you will be able to make your monthly repayments comfortably, while also ensuring that you are slowly but surely building your credit score.<\/span><\/p>\n

To help break this down even further, let\u2019s take a deeper look at the positive and negative ways a car lease can impact your credit score below:<\/span><\/p>\n

Positive Ways A Car Lease Can Impact Your Credit Score<\/b><\/h2>\n

As we\u2019re sure that you likely already know by now, there are <\/span>plenty <\/span><\/i>of positive ways a car lease can impact your credit score! For starters, believe it or not, nearly half of your overall credit score is based on your repayment history, so taking out a car lease is a fantastic way to build credit over a long period of time. <\/span><\/p>\n

So, as long as you are making sure that the car lease contract you take out is an affordable amount that you won\u2019t have any trouble paying, then you can be confident that your credit score will slowly but surely increase as time goes on.\u00a0<\/span><\/p>\n

In addition to this, a car lease is classified as an \u201cinstallment\u201d account, as opposed to a credit card, which means that taking a car lease out (that is comfortably within your means, of course) will appear as a different form of a credit on your file, which could potentially help to boost your overall credit score. <\/span><\/p>\n

With all of these factors combined, you will be able to enjoy an increased credit score that will not only increase your borrowing capacity but will also help you to appear as a more reliable borrower – which might mean that you are able to enjoy better interest rates and lower prices.\u00a0<\/span><\/p>\n

Negative Ways A Car Lease Deal Can Impact Your Credit Score<\/b><\/h2>\n

Even though there are plenty of ways that a car lease can help to positively affect your credit score, it\u2019s important to remember that there are a few ways that a car lease can negatively impact your credit score, too. <\/span><\/p>\n

The main way that a car lease can negatively impact your credit score is by failing to pay the monthly repayments on time, which will likely decrease your score.\u00a0<\/span><\/p>\n

Additionally, in some instances taking out a new car lease deal can cause a credit score to drop by a few points. This is quite a common occurrence and can be easily remedied by ensuring that you are staying on top of your monthly repayment schedule.\u00a0<\/span><\/p>\n