The Best Credit Score for Leasing a Car, and 6 Tips for Fast Credit Building

Leasing a car can be one of the best ways to experience the newest models without taking on a large financial obligation. With the ability to customize the mileage, term, and monthly and down payments to your needs, and more assurance of the resale value of your car when your lease is up, leasing has become an attractive-car buying option.

However, just like when financing a new or used car, you’ll want to make sure your credit is in order before you try to lease a car. So what’s the best score to walk into the dealership with?

Unfortunately, that answer can vary greatly, but we’re here to give you some guidance to help you determine if leasing is the right option for you based on your credit.

What is “good” credit?

This answer is also dependent on numerous factors, but by learning a few key benchmarks and keeping your own financial goals in mind, you should be able to gauge the health of your credit pretty accurately.

Across any industry and any lender, you’ll commonly hear of 670 as a baseline “good” credit score. Depending on the scorer, it’s possible to see a range of 250 at the lowest and up to 990 at the highest, but your credit will commonly be scored from 350 to 850.

Credit Score Range

Whether you’re financing a car or home, leasing a car, taking out a personal loan, or borrowing money in another form, your credit score will typically determine how much money you will need to put down, the maximum monthly payment you can get approved for, and the length of your loan term.

Those with higher credit scores are considered more “trustworthy” to take on higher monthly payments with lower down payments and for longer terms. The lower your score, the more you may be asked to put down on your loan to reduce your payment and term.

What credit score is needed to lease a car?

Technically speaking, there is no “required” credit score to be able to lease a car, though as previously explained, the higher your score, the more flexibility you have in terms of making a down payment and getting your desired monthly payment, term, and mileage on your lease.

To gauge whether your credit score is ideal for leasing a car, take into account the factors of a car lease that will be impacted by your score.

If your score is low (less than 670):

1. Are you willing to make higher payments and pay more in interest?
2. Do you have more money to put down to get approved?
3. Do you have a vehicle you can trade in to contribute to your down payment?
4. Are you able to take on a lower-mileage lease, like 10,000 miles/year?
5. Can you find a cosigner to help increase your approval odds and lower your interest rate?
6. Have a plan for when your lease is up; with fewer, cheaper options to pick from, your leased car may not hold as much value over the course of your lease.

If your score is good (over 670):

1. Know that you can still put more money down to lower your payment, even if your interest rate is already competitive.
2. Calculate the amount of miles you typically drive in a year, and opt for a higher-mileage lease if needed.
3. Consider the residual value of your lease; you may have wider options to pick from when leasing a new car, giving you more flexibility to pick a car that will hold its value.
4. Know that you may still benefit from a cosigner; with scores going as high as 850, there may be someone you trust with even better credit that can help lower your interest rate.

Knowing your credit situation is only the first step; if you’re looking to lease a new car, here are 6 short-term credit-building moves you can make to boost your credit score for a more competitive interest rate and better approval odds.

1. Decrease your credit utilization.

Credit cards have a credit limit, or the maximum amount you’re allowed to borrow on the card. Credit utilization represents how much of this limit you’ve used up, and this utilization rate greatly impacts your credit score.

You’ll commonly see a credit utilization of 30 percent of your limit on each card as a recommended maximum, but some sources suggest as little as 10 to 7 percent. That means if your credit card has a limit of $5,000, you should spend a maximum of $1,500 to stay under a 30 percent utilization rate.

If your credit utilization is currently higher than 30 percent, you should draft a payment strategy to decrease your credit card balances before making your car purchase.

2. Increase your credit card limits.

Another way to quickly improve your credit score is requesting an increase on your credit card limits. Some credit card issuers will automatically increase your credit limit, but others will not increase your limit unless you explicitly request it.

If you are successfully granted an increase on your credit limit on a given card, your credit utilization rate will immediately drop, which can improve your score.

3. Make on-time payments.

On-time payments are critical for maintaining a good credit score, and if you’ve started to miss payments on credit cards or other credit obligations, you’ll want to rectify those habits before you look to lease a new car.

If, other than your recent missed payments, you have a strong track record of making on-time payments, you can call your creditor(s) whom you’ve made payments to ask them to consider withholding the missed payment(s) from their reporting to credit bureaus.

Late payments can have a long-lasting negative impact on your credit report, up to 7 years in some cases.

4. Become an authorized user.

If a family member or close friend that you trust has a strong credit score and credit card(s) with a high credit limit, becoming an authorized user on their credit card can greatly improve your score, even if you never actually use their card.

Before employing this strategy, ensure that you only reach out to someone if you know they currently have a good track record of making on-time payments and are very unlikely to start missing payments or overusing their credit cards.

5. Dispute credit reporting errors.

Inaccurate or invalid credit activity could be appearing on your credit reports and reducing your scores. You are entitled to free weekly credit reports from each major credit bureau; review these regularly and check for any errors.

Errant credit reporting may include credit activity that is not actually yours, payments marked as missed or late that were actually made on time, and even credit activity that should be considered too old to appear on your reports.

AnnualCreditReport.com is a federally-authorized source for free weekly credit reports from the three major credit bureaus, which are Equifax, Experian, and TransUnion.

6. Find a cosigner for your lease.

Finding a cosigner with a higher credit score can greatly improve your odds of approval and unlock a more competitive interest rate.

If there is a trustworthy friend or family member with good financial standing who is highly unlikely of running into trouble with their credit, bringing them on as a cosigner can lower your interest rate, thus lowering your monthly payments and the total cost to you at the end of your lease.

If you’re considering a cosigner, check out our 5 Essential Tips for Cosigning a Car Loan.

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In total, leasing is a popular option with many upsides, both financially and for your driving experience. Leasing is a great way to experience the newest automotive technology and get a reliable vehicle with factory warranty coverage. Leasing can even save you money on monthly payments when compared to financing.

Before checking out a new car to lease, consider following our tips to give your credit score a quick boost. This can improve your approval odds and even get you a more competitive interest rate that may unlock some upgrades when it comes time to pick the trim level, mileage, and other features of your new lease.

Then, when you’re ready, head to DriveHH.com to find the perfect new car for you from our selection at H+H Chevrolet, H+H Kia, and H+H Jeep Dodge Ram!

Sources

1. NerdWallet: Real Ways to Improve Your Credit Fast