What Credit Gets Checked for a Car Lease?

Borrowers with bad credit often turn to car leases, because the common belief is that car dealerships accept any kind of credit history. When the dealership checks a person's credit history, it is usually a credit file kept by either one or all three of the national credit bureaus. The borrower might be able to work around a lack of credit history or bad credit, but without a great credit history, a lease is no guarantee.

Identification

A credit check refers to a traditional credit history tracked by Equifax, Experian and/or TransUnion -- the three major credit reporting firms in the U.S. Most major lenders send customer payment history to the national bureaus and use reports from them. Not all lenders report to the bureaus. Apartment leases, cell phone providers and utility companies are usually omitted from a traditional credit history.

Importance

Car dealers tend to set the cost of the lease based mostly on a person's credit history, as previous payment history is a good indicator of the chances the borrower misses payments in the future. The dealership will likely raise the cost of an auto lease as a person's credit history gets worse. If the borrower has several late payments and delinquent accounts, the dealership may reject an application for a lease.

Alternative Credit History

No lender or service provider has to use a credit history from the national bureaus. Lenders, such as car dealers, sometimes accept an alternative credit history when the borrower does not have a traditional credit history. However, an alternative credit history is always weaker than a primary history, because the national bureaus are more respected, according to the Privacy Rights Clearinghouse.

Tip

Consumers looking for a car lease without a credit check might be able to find a dealer willing to forgo one, according to CarsDirect. The large, nationwide rental companies often agree to not pull a credit history if the borrower puts the monthly payment on a credit card. A borrower can probably get a car without average or better credit, but he can expect to pay more than someone with a great score. Thus it pays to eliminate debt and have several months of on-time monthly payments to all creditors before applying for a car lease.