What is a Credit Score?
A credit score is a tool used by funders to help then decide whether you qualify for a particular financial service, for example a car lease.
There are four main factors that are considered when calculating your credit score; your payment history, the total amount of credit you owe, the length of your credit history and the types of credit you have.
You can find out your credit score with any of the UK’s three main companies Equifax, Experian and TransUnion.
If you have been declined finance in the past or have declared bankruptcy, entered into an Individual Voluntary Arrangement (IVA) or have a County Court Judgement (CCJ) then you’re credit score will have be affected. Even if you’ve just made a late payment on your credit card then this will have an impact.
If you’re worried about your credit score being low, don’t be. There are leasing options available to you. After you’ve read through our guide just give our Sales Team a call on 0330 221 0000 to discuss the options available for you.
Why is it Checked?
As part of your application process the funder runs a credit check to find out your credit score. This helps them determine whether you are likely to be able to afford the lease payments.
What Do They Check?
In the UK there are three main companies that are used to check your credit score Equifax, Experian and TransUnion. When you apply for a lease then the finance company you apply with will check your credit score with one of these companies.
When funders check your credit score, they are looking to confirm:
- Your full name
- Your current address
- Your date of birth
- Your financial history over the last few years, including; credit limits, mortgages, loans, overdrafts bankruptcies, CCJs or debt issues
- Electoral roll information
- Financial links to other people
- Whether your identity has been used for fraud
How Long Does it Take to Check?
Most credit checks usually take between 24 and 48 hours, but if the funder asks for additional information then this will take longer.
We will let you know once your funder has completed the necessary checks and what the outcome of these are.
What Score Do I Need to Get Approved for Finance?
Most finance companies look for a credit score between good and excellent.
If your credit rating is below this then they may ask for additional information in order to see if they can approve your application. This may be in the form of more documents, for example your wage slips for a number of months so they can see proof of your income. Alternatively, they may ask for a higher initial rental payment.
Will Leasing Impact My Credit Score?
Yes, it will. Initially it may have a negative effect on your score as it is another line of credit being placed onto your file.
However, as long as you keep up the monthly payments on time and without issue then your lease should help gradually improve your overall credit rating as it shows you can make regular repayments without issue.
What Happens if I Don't Pass the Credit Checks?
If you do not get approved for finance, then the funder is not obligated to let you know why they have not accepted this.
If you feel the decision is unfair then you can appeal it. You would need a copy of your credit file in order to do this.
Alternatively, you may be able to apply again with a joint application or with a guarantor. For more information on either of these options then just click below.
Some of our funders may be able to offer a joint application.
This will usually need to be with a spouse or close family member.
With a joint application the finance company will look at both incomes combined and run credit checks on both parties.
Please note that if you are successful with a joint application then both parties will be responsible for the monthly payments for the duration of the lease.
If a joint application doesn’t sound right for you then maybe an application with a guarantor is.
A guarantor is a third party who guarantees that the payments will be made, and if the main applicant defaults, they will be responsible for the lease payments.
If you apply for finance with a guarantor, then they will usually need to be a close family member and will need to have a strong credit score.
Not all of our funders accept finance application with a guarantor, but we will let you know if this is an option for you.
Alternatively, they may offer you credit but with a higher initial rental payment. This is because it will reduce the amount you will be paying each month, so makes the payments more affordable for you and reduces the amount of credit you will hold with them once the initial payment has been taken.
One way that drivers who own their current vehicle choose to fund their larger initial rental payment is from the sale of their vehicle.
We work with Carwow to help you with a quick and hassle-free sale if you want to sell your current car. Find out more information here.
For more information on the general lease process please look at our Personal Leasing Guide or Business Leasing Guide.
If you want to discuss your credit score and the leasing options available to you, please give us a call on 03302210000 and speak to one of our helpful Leasing Consultants.