How does leasing a car affect credit?

I've been working on rebuilding my credit for the past year. My car is on its way out, so I'd like to start leasing one. How will leasing a car affect my credit?

Working to rebuild your credit is no small task, so understandably, you don’t want to do anything that’ll negatively impact your hard work. Thankfully, in most cases, a lease can help build credit!
When you first apply for a lease, you will have a hard inquiry on your credit report. Any time you open a new line of credit or a new account, you’ll often see a slight temporary drop in your credit score due to the credit check required during the application process.
That said, your lessor will report your monthly payments to the three major credit bureaus. So, as you make on-time payments and the amount you owe on the lease goes down, your credit score should increase.
Alternatively, be aware that making late payments or not keeping your lease in good standing will negatively impact your credit.
To avoid reversing the hard work you’ve done this past year, be sure to shop around with several dealerships. Shopping around ensures you’ll get the best interest rate and monthly payments for your lease, meaning you can easily stay within your budget!
And to reduce your car expenses further, avoid overpaying for car insurance by shopping around to find the best deals. Jerry makes it easy. Jerry is an app that gathers quotes from over 50 top insurance providers in seconds!
Emily Maracle
Answered on Nov 18, 2021
Emily Maracle is a car insurance specialist living in New York. Originally from the Pacific Northwest, she has a degree in English Literature and a background in customer service. She enjoys cooking, gardening, and living sustainably. In the future, she can't wait to upgrade to a hybrid or electric car.

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