When you sign a lease on a car, you will be required to make monthly payments much like payments on an auto loan. Your credit score will affect the monthly payments and the types of vehicles that you are qualified to lease. If you continue to make your monthly payments on time, it can help to improve your credit score.
Many people ask, “does leasing a car improve your credit,” and the answer depends on how diligent they are with payments. While missing a lease payment can lower your credit score, making all of your payments on time can have the opposite impact.
Leasing a car and making your payments on time each month can be a good way to boost your credit score.
Since leasing a car works similarly to monthly auto loan payments, you will be able to build or repair your credit as your lease goes on and you make your payments on time.
However, leasing a car can also hurt your credit if you ever fail to make a payment on time or you default on your lease.
Make sure you agree to lease terms that you can afford in order to avoid damaging your credit.
Most leases are set for 24 to 48 months and car dealers and lenders will report payments to the three major credit bureaus each month.
Note: In some cases you may notice a small drop in your credit score when you sign a lease because you will have a new line of credit in your name.