With many people returning to their workplace, some may be looking for a new car for their daily commute.
However, with the mid-to-mid-size car costing £ 24,260 in 2021, leasing may be their best financial option, which requires a good credit rating.
To help those with bad credit improve their chances of acceptance, the Vanarama leasing company has created a helpful guide on build a good credit score for renting a car.
Can You Get Auto Finance With Bad Credit?
When a finance company considers applying for a lease, they look for indicators that you are a reliable borrower, such as your income and your credit rating. The better your credit, the less risk you are, which improves your chances of being accepted.
In some cases, you can rent with a bad credit rating, but you will have limited options and you may not be eligible for some offers. Fortunately, Vanarama has created a eligibility verification tool, which can help you determine if you are likely to be accepted for one of their car rental offers.
What is the minimum score required to purchase a report?
Last year, Experian published a report which classified clients into the following categories, based on their credit rating:
- Super bonus – 781 to 850 points
- Bonus: 661 – 780 points
- Non-bonus: 601 – 660 points
- Subprime: 501 – 600 points
- Deep subprime: 300 – 500 points
Typically, lenders look for borrowers in the “major” range and above, so you will need an Experian credit score of 601+. You can check your credit score for free on their site.
10 Ways To Boost Your Credit Score For Car Leasing
- Did you know that renting can increase your credit score (if you pay your rent on time)? Simply ask your landlord to sign up for the Rental Exchange Initiative.
- Dissociate yourself from previous financial partners by closing your joint accounts, as their financial habits can impact your score.
- As your payment history is 35% of your credit score, you should always pay your bills on time so that it does not reflect badly on you. Especially since a late payment can remain on your credit report for up to seven years.
- Check your credit report for errors and contact the credit reference agency directly to correct any you find. If their investigation supports your claim, the information will be deleted or changed, and your credit score will reflect that change.
- Check that your address is correct on old active credit accounts, as this helps to prove the accuracy of future credit checks
- Never take money out of a credit card because not only will you have to pay interest charges, but it suggests to lenders that you can’t budget within your means.
- If you have a credit card, try making two payments per month and always pay more than the monthly minimum, as that suggests you’re good at budgeting.
- If you have old credit accounts that you aren’t using, don’t close them. Although the credit history of these accounts remains on your credit report, closing credit cards while you have a balance on other cards could cause your score to drop a few points.
- If you have a credit card, always stay below 25% of your credit limit. For example, if you have an allowance of £ 1,000 on your credit score, never spend more than £ 250.
- Limit your new credit requests. There are two types of inquiries into your credit history, often referred to as “hard” and “soft” inquiries. An app can include checking your credit score or allowing a potential employer to check yours. While serious investigations can affect your score from a few months to two years. These demands include applying for a new credit card or a mortgage – so limit them.