“Credit checks” - just hearing the word can be enough to send shivers down people’s spines. Why should other people want to go snooping around our private finances?
While they may not always tell the whole story about our personal finances - and they certainly don’t always tell us the answers we’d like to hear - there’s no denying that credit checks are incredibly important.
Your credit score could be the deciding factor between leasing or buying a car, so read on!
Why do I need to have a credit check when leasing a car?
You might have already done the maths - you may even have some money tucked away ‘just in case’, but that doesn’t exempt you from a credit check. Simply put, a credit check is the best way for a finance provider to ensure you’ll be able to keep up with the monthly payments.
Leasing brokers use your credit score to accurately estimate the overall cost to lease a car, including things like the interest rate on a car lease and how the payments are divided between your deposit and monthly rentals.
Can I lease a car without a credit check?
While adverts for “no credit check car leasing” may seem tempting if you fail to secure a lease deal the first time around, you might want to think twice before pouncing on such too-good-to-be-true offers.
As the BVRLA (British Vehicle Rental and Leasing Association) states on their website:
All legitimate BVRLA leasing broker members adhere to FCA (Financial Conduct Authority) rules and will carry out credit and affordability checks. Those who don’t will not be legitimate traders and could be out to scam you.
But that’s not to say that you won’t be able to find a business or personal contract hire deal without a good credit score. There are a number of leasing brokers that cater specifically to people with poor credit history.
What will a credit report show?
A leasing broker will be able to find a number of things on your credit report, including:
- Your name and date of birth.
- Electoral roll information, which will provide information of your previous addresses.
- A list of your credit accounts and the dates when they were opened, including accounts that have been closed in the past 6 years, as well as information on credit limits and loan amounts on any mortgages.
- Credit cards and loans.
- Details of your current account overdraft.
- Details about other application searches.
- Information about whether you have missed or made late payments, as well as the number of times this has happened.
- Any financial links to other people and if you have joint credit.
- Whether you have had debt problems in the past 6 years, including bankruptcies, Individual Voluntary Arrangements (IVAs) or County Court Judgements (CCJs).
- Whether your identity has been used for fraud.
What will lenders look for on my credit report?
The main things that lenders will want to assess are your missed payments, if you have a history of debt and the number of credit accounts that you already have.
Lenders will usually have their own credit scoring system, and will judge your credit history against their own credit rating system to decide whether you should be approved for finance or not, so don’t be surprised if you get different answers from different lenders.
Where can I check my credit score?
There are a number of online services that you can use to check your credit rating, including Experian, Equifax and TransUnion. You will usually have to pay for these services, but there may be an initial free trial. Be sure to cancel your subscription if you only wish to use the service once.
Can I lease a car with bad credit?
There are a number of dealers and finance companies that deal specifically with people with poor credit scores, but you'll not have access to the same specs, savings, and car lease extras you would with a better score. You'll not be able to use your car lease negotiation techniques on them.
If you're a start up company looking for a new business car lease, they may just ask you to provide more extensive information to help them in place of a long-term credit history.
Sometimes you can appoint a car lease guarantor to assume responsibility for the leasing payments if you default, but many brokers don't allow this.
For more on leasing with bad credit, see our "do you need good credit to lease a car?" guide for more information. Be sure to also check out our car leasing tips to reduce the cost of the lease, which will be pushed up to account for your poor credit score.
Checked your credit score and ready to lease?
If you have a credit score of Good or above, you're very likely to be accepted for a car lease.
Make some serious savings by comparing car lease deals with Lease Fetcher. We round up the top personal car leasing and business car leasing deals from brokers across the UK to make your search for that sweet new car so much easier.