Do Leases Come Up on My Credit?

Whether a lease appears on your credit report depends on what type of lease it is. In general, building leases do not appear on your credit, but vehicle leases do. Manage your auto lease carefully to make sure you help your credit instead of hurting it.

Non-Auto Leases

Apartment and house leases generally do not appear on your credit report because the landlord is not extending you credit, but just collecting rent on a month-to-month basis. The one circumstance in which a lease might affect your credit is if you move out and stop paying rent before the agreed date in your lease. In this case, the landlord can take you to court and obtain a judgment against you, which will appear on your credit report and lower your credit score.

Auto Lease

An auto lease appears on your credit report almost exactly as an auto loan does. Often your credit report does not specify whether an auto account is a loan or lease. Each of your payments on the lease appears on your credit report. In addition, the leasing company often reports the residual value on the vehicle as the amount you owe on the lease.

Effects on Credit

When you first obtain a lease, the leasing company runs a credit check and, after approving you and beginning the contract, starts reporting the lease on your credit report. Both of these actions lower the portion of your credit score that considers new credit. After that, a lease mainly affects your credit through your payment history. Making late payments hurts your score just as much as making late payments on any other type of loan or credit card. Paying on time, having a lease for a long time and having a lease as an additional type of credit can all help your credit score.

Ending Lease Early

A lease is a contract, and if you terminate your lease before it is up, this can seriously damage your credit score. Stopping payment and returning the vehicle to the leasing company is just like a voluntary repossession on an auto loan, which significantly lowers your credit score. To avoid damaging your credit, follow through with your lease or work out an alternative plan with the leasing company. You might be able to trade in a lease for a different one or work out an agreement to make reduced payments for a time while you get your finances in order.