You don’t need a certain credit score to lease a car. The average credit score among new lessees has ranged from 715 to 722 over the past five years, according to Experian. But people with credit scores below 580 have taken out roughly 13% of the auto loans and leases over the past decade, according to data from Equifax. And more than 7% of new leases go to people with credit scores of 300 to 600. Such scores are firmly within “bad credit” territory, which just goes to show that a low score won’t completely prevent you from leasing a new set of wheels.
Although it’s clearly possible to lease a car with pretty much any credit score, the lower your score is, the fewer options you’re likely to have and the more expensive they’ll be. Just consider how those low rates you see advertised on television are “limited to well-qualified lessees.” Whether you opt for a lease or a loan, you’ll also have to get car insurance. And the cost will also depend on your credit standing, with people who have excellent credit capable of saving a great deal.
Below, you can learn more about how your credit history will affect your car-leasing future. If you don’t know what your credit score is, you can check it for free on WalletHub. Only WalletHub offers free credit scores and reports that are updated on a daily basis, plus personalized credit analysis that will help you improve your score and get better car loan terms.
Here’s Who’s Getting Car Loans & Leases:
|Year||Median Credit Score||10th Percentile Credit Score||Borrowers with Scores Below 620|
Meet the Average Lessee
No auto lender has a firm credit-score cutoff point – at least not one that’s publicly disclosed. But there is a great deal of data on recent lending activity, which can help us better understand leasing requirements in general. Below, you can see how the average lessee’s credit score and monthly payments have fluctuated in recent years, as well as how people with bad credit tend to end up paying more.
Average Credit Score for New Leases
|Year||Average Credit Score||Average Monthly Payment||Average Monthly Payment (300-500 credit score)|
Source: Experian data for Q3
Average Credit Score By Car Type
We can take a deeper look inside the average lessee’s finances by considering the credit scores of folks who recently obtained leases. The chart below shows those scores for the 10 most leased vehicles in 2015, according to the latest available Experian data.
|Vehicle||Credit Score|||||Vehicle||Credit Score|
Chevy Silverado 1500
Bear in mind that your credit score doesn’t have to match or exceed the average for a given model. An above-average score won’t guarantee approval, either. Other factors, such as your disposable income, age and occupation, can also play a role.
It’s also important to note that the particular score your lender pulls may not reflect the Experian scores referenced in the above table. This is especially true at large banks and credit unions, which often tweak the scoring models to create their own scores. Lenders may even look at industry-specific auto credit scores.
But most credit scores are similar, so it’s definitely worth checking and improving yours well before applying for a lease. You can check your score for free on WalletHub, the first and only website to offer free credit scores and full credit reports updated on a daily basis.
How to Improve Your Credit Before Leasing a Car
A higher credit score will help you save money on a car loan and make it easier to get approved. But everyone’s credit history is a bit different, which means the recipe for a higher score will be, too. So make sure to sign up for a free WalletHub account and check out your personalized credit analysis. You’ll see a grade for every major component of your score as well as advice on how to improve problem areas.
In general, making sure you have an open credit card account whose bill you pay on time (and preferably in full) every month is the foundation of credit score improvement. This will ensure positive information gets added to your major credit reports on a monthly basis, which will help cover up past mistakes and establish a track record of responsibility. You don’t even need to make purchases with the card to benefit. But if you do, try to use less than 30% of your credit limit each month. Reducing your so-called credit utilization is one of the quickest ways to improve your credit score.