Leasing a car has a significant impact on your credit profile. With a help of leasing, you can improve your credit score or mess it up big time. We will explore the way leasing builds your credit score and what credit score is good to lease a car of your dreams.
If you have a question “Can I improve my credit score with leasing?”, you will be pleased that there are reliable ways to do it. If you don’t feel like reading the info, we can answer all your questions in no time, just contact us!
Once you made a decision to have a car you try to choose either auto loan or making a purchase is better. If you want to buy a car you have to be ready to pay the total cost of the car or take a loan, and nowadays it’s going to stretch up to 8 years. When you want to make a lease deal you have to know several aspects of leasing. What is the secret of leasing popularity now? In a nutshell, it is considered to be a money-saving option.
When you lease a vehicle you pay for the car depreciation during the lease term. In general, it’s the difference between a car’s value when you start and finish using it. You can also take advantage of an exclusive buy back program and make some money for your next lease! Commonly, the opportunity to drive a vehicle with the latest technology features for fixed monthly payments and the initial payment on your wish is the decisive factor for everybody to choose this way of car ownership. Learn more details between leasing and buying here.
Anytime you want to make a loan you have to show your credit history. Any financial operation requires proof of the customer’s reliability and payments’ sustainability.
According to FICO Scores, there are 5 main units of your credit score:
35% — Payment History
The lenders would always like to know how responsible you are for regular payments. Good credit history can be only if you make all the payments on time. It will be a positive point for lenders to ensure they don’t have any risks with you as a customer.
30% — Amounts Owed
This aspect shows how much money you use for your credit. If you are a big fan of having several credit accounts you can be considered as overextended which means a problem of potential defaulting.
15% — Length of Credit History
Here a well-known basic rule works really well: the longer history you have, the higher score you can expect.
10% — New Credit
New credits work on your behalf sometimes but not at once. That’s not a good point for lenders, so if you want to improve your credit score, reduce the number of credits or don’t open 2 or more ones at the same one.
10% — Credit Mix
Types of credits also can be considered. It is not a decisive factor but the lender will pay attention if you use only a credit card sometimes or you have a mortgage loan and retail accounts as well.
The major rule you have to remember — pay your loans and debts on time so the reports of you will be appropriate for your further activity!.
The main point every driver of a leased vehicle wants to know is how leasing a car affects your credit score?
The most important aspect of leasing is that you are building a long-term payment history. If you manage your payments well, they are reported to several national credit bureaus. The leasing company carefully checks the info on your monthly payments and fees and shares it with the relevant institutions which will generate your credit score later.
By the FICO Scores, it will be the major factor of 35% in your credit history. Also, an installment loan will be a part of your credits mix which shows your ability to pay for it. It will really help you if you have only one more type of credit. Thus, being careful and responsible enough can boost the vital branch of your credit score!
But be attentive with making payments because your irresponsibility can spoil the credit history as well. In case you miss the payment for more than 29 days or default the lease deal you will be reported not from your best side. You have to be attentive to monitoring your credit score and make on-time payments to reach good authority. You can also calculate your deal to get an approximate estimation of your next car.
Therefore, a lease agreement can be the main brick that will help to improve your credit history. Your responsibility is to be careful and attentive enough with making payments and don’t admit more than 30-days termination. Our duty is to report your money activity and provide the best offers for you. Keep in touch with your GPM personal expert and start cooperation with your reliable partner!
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