Can I Get A Business Car Lease With Bad Credit?

There are a number of reasons why a business may have bad credit history. If you are unaware of the fact, it can come as an unexpected shock when you find out. A bad credit history can affect your chances of obtaining new credit – including obtaining a business lease car.

To explain why, we go into more detail in this guide to help you understand if you can get a business car lease with bad credit.

When anyone applies for a car lease, they will have to undergo a standard credit check. This is also the case when it comes to a business car lease. Although it may restrict the options available to you, if you have bad credit, you may still be able to secure a business car lease.

Why do you need good credit for a business car lease?

Like with any other form of credit you try to obtain for personal or business reasons, our funders want to verify you are able to comfortably afford the agreed payments. To ensure this, funders will run a check on your previous credit history. The better the company’s history, the easier it is to secure the credit your business is after.

While you will spend some time researching the right car or van for your business, it also pays to have knowledge of your company’s credit history before applying. This is because your credit rating will have a direct impact on what you will be asked to pay on the business lease. If you have a poor credit history, the monthly payments may be more expensive, depending on which funder provides the contract.

What is shown on a company credit report?

Financial companies rely, in part, on credit scores as they are a proven method of assessing someone’s financial status. As the old saying goes ‘the numbers never lie’, and a credit report offers a black and white insight into the reliability of an individual or company to receive and pay back credit as agreed.

First, Leasing Options will complete an initial affordability assessment. However, the exact methods and processes used by each financial company are different. Though there are some general rules each funder will follow, which are revealed in the actual credit reports themselves. The sort of information they contain includes:

  • Your full name, date of birth and current address
  • Any previous credit limits, mortgages and any type of loan
  • Electoral roll information
  • Information related to any current account overdraft
  • Missed or late payments related to outstanding credit and how many times
  • Highlighting any financial links to other people
  • Six years’ worth of information related to bankruptcies, CCJs or debt issues
  • Whether your identity has been used for fraud

How to improve your business credit score

If you decide that applying for a business car lease is likely to be too difficult because of your credit rating, there are a number of things you can do to improve it.

Obtain your credit report

The first step is to get a direct look at the same credit report the financial company has seen. This can be obtained for free from the likes of Experian and Equifax. Make sure all of the information is correct and if there are any mistakes, be sure to point these out so they can be corrected.

Keep your current account in credit

Wherever possible, avoid falling into the overdraft and if you have any old business accounts that are lying dormant, be sure to close them if they are not likely to be used in the future.

Get a credit card

If your credit is good enough to get one, using a credit card to boost your score is a good move. This means ensuring the balance is always paid off each month, along with any charges. Cards with 0% introductory rates are often the best starting point, but always check when the introductory rate ends. Be sure you can afford this before getting one, as being unable to pay your debt will only make your credit score worse.

Keep on top of bills

Pay all of your company's bills on time and ensure they are in your business' name. Change to using Direct Debit wherever possible, as this makes it easy to pay on time while also helping your credit score.

Cut down on applications

Every time you apply for credit it leaves behind a ‘footprint’. If you believe you are unlikely to secure the line of credit, then it is best to avoid applying until your credit score has improved.

What must be remembered is that your credit history is not something you can rectify in a few days or weeks. The minimum amount of time you will need to see a noticeable change to your credit rating will be a number of months. While this may seem like a long time, if your credit history only needs to be improved slightly, it can really benefit your business in the long run.

For more finance information, check out the rest of our simple guides, where we’ve covered everything you need to know about leasing. Or if you have any other questions, just contact our helpful customer service team.