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Do I Need Good Credit?
Visit our Credit Score page for info on what it takes to assume a lease.
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| Do I Need Good Credit to Assume a Lease?
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A Good Credit Score Matters When Assuming a Lease
If you are considering assuming a car lease, it is worthwhile to know your credit score to know your chances of becoming approved by the lease company. Every lease company that allows lease assumptions will require that an interested lease buyer become credit approved before preparing the new lease assumption contract.
What is a credit score?
A credit score is a statistical analysis of a person's credit file over time. Credit scores are derived from credit information reported by various lenders to the credit bureaus who collect, store, and report this information to other interested parties.
The credit score number represents a borrower's potential creditworthiness, which is the perceived likelihood that the person will pay debts in full when due. The most popular credit score, the FICO score, ranges from 300 and 850 with a higher score indicating a lower credit risk to the lender (higher is better).
What sort of credit score do I need to gain credit approval?
While each lease company has their own metrics for approving credit, lease companies generally look for an individual who has an 'A' or 'B' class credit score and is able to verify income and/or assets. Typically the original lessee who is looking to get out of his or her lease has already gained approval within these guidelines and lease companies are looking for an equivalent or better score from the new lessee in order to process the transfer.
Typical credit classes and scoring
Here is a general guideline to use when evaluating your chances for becoming credit approved. Your credit class (e.g. A, B, C, etc.) is an important element in receiving a credit approval. Credit classes use a typical alphabet grading system and present the lowest risk (best credit) to highest risk (worst credit) in an 'A' to 'F' grading system.
- ‘A' Credit - 720+ FICO score, over 5 years of credit history, no defaults, extremely rare late payments, previous comparable high credit, typically a home owner.
- 'B' Credit - 660+ FICO score, at least 3 years of credit history, normally a security deposit or rate adjustment is required, previous auto credit established and fulfilled, no current late payments, no 60 day late payments in the past 12 months.
- 'C' Credit - 620+ FICO score, 1-2 year credit history, security deposit or rate adjustment required, previous auto credit established and fulfilled, no bankruptcies in the last three years, no current late payments.
- 'D' Credit - 500+ FICO score, no current late payments, no bankruptcies in the last 2 years, established bank account, existing car insurance, and phone bill in your name.
- 'F' Credit - less than a 500 FICO score, no current late payments, bankruptcies recently discharged, existing car insurance.
Don't know your credit score?
If you don't know your credit score, there is a quick and easy way to find out. Credit agencies do supply free credit reports each year upon receiving your written request, but this does not include your FICO score. To receive your FICO score, you will need to purchase a FICO report. FICO reports will contain both your credit history as well as FICO scores from the credit reporting agencies to determine your level of credit quality. We highly recommend Fair Isaac's
myFICO.com
as a safe, secure, and cost effective way of seeing your complete credit picture.
There are 3 major credit reporting agencies that lease companies use to determine if an applicant can become credit approved. These credit bureaus include Equifax, Experian, and TransUnion. Each company has their own reporting methodologies and will determine different credit scores based on a number of proprietary factors, so it is best to get all three for a full picture of your credit.
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