What Credit Score Is Needed to Lease a Car?

Around eight percent of Americans have been rejected for a car loan in the past 12 months due to poor credit scores. Fortunately, there are other ways to drive a car that you desperately want, such as car leasing. 

However, if you’d rather not enter into a long-term commitment by car leasing, a car subscription is a more convenient and flexible option for driving your dream car. With a FINN car subscription, you can choose from a wide range of vehicles to drive for six to 12 months. Your monthly payment includes maintenance, insurance, and roadside assistance. Plus, you can book the car directly online. With a credit score requirement of 640, a FINN car subscription may be the perfect option for you. 

If you're still considering leasing, you may be wondering how you will finance it. Most people know that their credit score is important but do you know what credit score is needed to lease a car? Is there a minimum credit score to lease a car? Can you lease a car with bad credit? And if your credit score is bad, how can you improve it so that you finally get the car you want?

Here’s what you need to know about credit scores if you’re looking to lease a car anywhere in the U.S.

Credit scores are a measure of creditworthiness. They form part of a credit report that details an individual’s debt history and provides valuable insight into the state of his/her credit profile.

This, in turn, informs lenders about the level of risk posed by a potential borrower.

Car leasing companies and other lenders will assess your credit score to gauge the level of risk and set lease terms accordingly. If you’re deemed a high-risk borrower, the terms of the deal will be less favorable or your application may be denied completely.

The elements that make up your credit score are:

• Your payment history: whether you make payments on time, how often you miss payments, how many days past the due date you pay bills, and how recently payments have been missed. 

• How much you owe on loans and credit cards: the entire amount you owe, the number and types of accounts you have, and the amount of money owed compared to how much credit is available. 

• The length of your credit history: the longer your history of making timely payments, the higher your score will be. 

• The types of accounts you have: a good mix of installment loans, home loans, and retail/credit cards is best.

Recent credit activity: many recent account applications may suggest potential financial trouble and will lower your score. 

The three major credit bureaus — Experian, Equifax, and TransUnion — allow one free credit report per year. 

Review your credit score before you apply for a car lease so that there are no nasty surprises. If you need to build your leasing credit score before applying, you’ll have time to take the necessary actions (see below).

Car leasing is seen as an easier and lower-cost way to drive the car you want without the types of hassles associated with owning the vehicle outright. You’re more likely to be offered favorable terms if you represent a low risk to the car leasing company — and that usually means a good credit score.

According to the credit bureau Experian, new car leasers had an average credit score of 736 during the third quarter of 2022.

Generally speaking, a credit score of above 700 should be sufficient to get an attractive car lease offer though requirements vary from one leasing company to another. A credit score well above 700 will likely help you negotiate a better deal on monthly payments.

Other factors besides credit scores may also be considered by leasing companies, such as income, existing payment obligations and track record with debt.

Bear in mind that since COVID, supply chain issues have meant that the supply of cars for leasing has often lagged demand, which makes it more of a seller’s market (potentially increasing credit score requirements). 

It’s no surprise that leasing a car is becoming more popular for U.S. drivers as it’s more economical than buying. But the minimum credit score can be problematic for some.

With FINN’s car subscription, we require a credit score starting at 640, rather than 700.

Also, no down payment is required and you only need to commit to 6-24 months rather than a few years, as usually applies with leases. Find out the difference between leasing and a car subscription here.

Our fast, reliable and flexible service is especially convenient because we take care of the insurance, registration and roadside assistance. This saves you the hassle and makes car ownership as easy as buying a pair of shoes online!

If your credit score is below 700, it generally becomes more difficult to lease the car you want. If you’re offered a deal, it may not be for the model you want and you’ll likely have to be more flexible with the contract terms. 

With a bad leasing credit score, you’ll probably have to pay a higher down payment when you sign the contract and more each month. These provisions incorporate higher interest rates and reduce the risk for the lender.

What if you have no credit history?

Some first-time car leasers or buyers may have no credit history or credit score. This means that lenders have no way of assessing their creditworthiness.

Other options besides leasing directly from the car company include asking a relative to help out or shopping around strategically for a lender who is willing to take a risk on you.

Other alternatives to leasing a car (bad credit)

There are other alternatives to leasing a new car if you have a bad credit score, such as leasing a used car or downgrading the model. Some drivers opt for buying a used car instead.

Used car leasing or purchasing lowers the risk for the leasing company or lender, increasing the chances of the application being approved. Experian reported that the average credit score for financing a used car was 678 in the third quarter of 2022 (compared with 736 for new cars).

If you’re not planning on car leasing for some time or are worried that when you do you could be knocked back by the lender, it’s best to start taking some simple steps to increase your credit score to lease a car.

Consider the following methods for building your credit score:

• Reduce high credit card balances to no more than 30 percent of your credit limit: the lower the better as credit utilization is a major contributor to your credit score.

• Pay bills on time: your payment history is a key factor in your score.

• Maintain a good credit mix (e.g., credit card, loan, leasing)

• Check your credit reports and dispute/fix any errors that may be negatively impacting your score.

• Resist the temptation to close any credit accounts unless there are unnecessary annual fees attached.

The most important aspect of building a credit score is to avoid delinquency (non-payment of debt). 

By leasing a car online and making regular payments on time, you will build your credit score over time and it will be easier to arrange car leases going forward. Lease payments are reported to the major credit bureaus in the same way that finance payments are.

You now have the ammunition you need to build your credit score. And, remember, you can reach the minimum credit score requirement for a car subscription easier than for a lease.