Car leases are popular among young people because the lessee gets a new vehicle with a minimal up-front investment and term length. However, leases are about more than getting a new car every three years. The truth is, they can be very difficult to obtain without good credit.
Minimum Credit Score
Lenders disclose no set credit score requirements, but as a general rule, a credit score of 660 or better is necessary to secure a lease. The minimum score doesn’t guarantee that you’ll get a lease -- lenders review many factors when extending credit, including how much you need to borrow and how much of a down payment you’re making.
Multiple Credit Scores
Even if you have a good credit score from one bureau, it doesn’t mean you’re in the clear. While it’s well known that your FICO score is used when determining your worthiness to lease a car, you actually have three different FICO scores, one from each of the major credit bureaus: Experian, TransUnion and Equifax. You don’t know which bureau the lender will pull from, so check your credit reports from all three bureaus to verify that they're error-free.
Car companies are notorious for advertising doorbuster deals for leases, only to indicate in the fine print that only the best borrowers qualify for these premium rates. A score of at least 720 is usually required to receive the best rates, often referred to by dealers as Tier 1 rates. If you have a score of 700 or better and don’t qualify for Tier 1 rates, you can still get a good deal, but don’t agree to anything you aren’t 100 percent sure you can pay off.
There are two main ways to get your credit in the best shape possible to lease a car. First, find a cosigner to lease the vehicle with you. This arrangement essentially uses the cosigner’s credit score as leverage for you, enabling you to enhance your credit score. If you can’t make the payments, the cosigner’s credit is just as damaged as yours, so be careful before taking the plunge.
Whether or not you find a cosigner, take charge of your credit score by reviewing your credit report and noting any errors or omissions. You can file disputes with the credit bureaus online after reviewing your credit report. If you have any legitimate negative information, such as late payments, write them a letter explaining the reasons behind the incident and ask if they’ll consider removing the negative mark. A single late payment can sink your score by as much as 100 points, so it’s certainly worth a shot. If you've already paid off a loan that the report lists as outstanding, provide documentation of the payoff and request a rescore.