Whether you want to lease a car, a property, or anything else, your credit score can affect your ability to be approved. So, let us take a closer look at how a bad credit score affects leasing.
Leasing a Car
When it comes to leasing a car, it is important that you have a good credit score.
Almost all companies that lease cars will require you to have a good to excellent credit rating to be approved.
That does not mean it is impossible to find a company that will lease a vehicle to you if you have a bad credit score, but it will undoubtedly be challenging.
Your credit score not only affects your ability to lease a car. It can also affect the interest rate that you pay. Typically, the worse your credit score is, the higher the interest rate will be.
However, it is not all bad news. If you have a poor credit score, you may be able to:
- Take out a personal loan to afford to buy a car You would then pay back the loan amount and the accrued interest in monthly instalments over a fixed period.
- Consider hire purchase, which would involve making monthly repayments until you have paid off the amount in full. You would then own your car after making the last payment.
- Consider personal contract purchase, which is similar to leasing. At the end of your contract, you would have the option to make a final balloon payment to purchase the car outright or continue a personal contract purchase for a different car.
Leasing a Property
Not all landlords run credit history checks for prospective tenants, but most do.
That is because, obviously, landlords want to ensure that their tenants can be trusted and will pay their rent in full and on time.
Both landlords and property managers can run credit history checks via agencies like TICA.
If your credit score is good, you will probably be accepted. If your credit score is bad, a landlord may feel you are a high risk when it comes to financial commitments and, therefore, refuse your application.
So, your credit score could potentially impact your ability to lease a property.
In fact, even if you have a decent salary and a flawless rental history, some landlords and property managers may reject your application if you have negative credit.
However, whether your application is successful often comes down to the specific landlord. Some landlords will not see a poor credit score as a reason to reject your application.
They may offer you the chance to lease a property even with a low credit score or they may request that you pay an additional deposit to act as security.
Alternatively, a landlord may ask for a guarantor to co-sign the lease, which will give the landlord peace of mind because he or she will have another source of payment if you cannot pay your rent.
So, while a bad credit score can indeed affect your ability to lease a property, it will not always. But it could take a lot longer to find a landlord who will accept your application if you do have a bad credit score.
It is best to always monitor your credit score so that you can ensure you maintain good credit history. You then have the ability to lease a property easily.
But if you do have a bad credit score, there are still options available.
Leasing Other Things
While vehicles and properties are the most common things to lease, there are all other kinds of things that you could lease, from boats to landscaping equipment.
Again, if you have a poor credit score, it could affect your ability to lease.
Therefore, it is always worthwhile ensuring you take steps to improve your credit score, such as paying off debts and paying your bills on time, before you begin looking at leasing options.
