When it comes to getting behind the wheel of a stylish and tech-filled new Honda car at Heritage Honda Parkville, leasing is a popular choice. Compared to financing, it offers lower monthly payments, more flexibility, and the ability to enjoy the latest Honda models when they are first released. One of the most common questions that our finance professionals receive is, “How does leasing a vehicle affect your credit?” — here is the answer.
The Initial Credit Inquiry
When you first apply for a vehicle lease, our finance team will perform a credit check. This results in what is known as a hard inquiry on your credit report. A hard inquiry will cause a small, temporary dip in your credit score, but it is a normal aspect of applying for any new line of credit.
Building Positive Payment History
The biggest effect that a Honda lease will have on your credit score will be related to whether or not you make your monthly payments on time. A car lease is reported to the credit bureaus as an installment account, similar to an auto loan. Making consistent, on-time payments is a great way to demonstrate financial responsibility to lenders, and doing so also will raise your credit score over time.
What if I Miss a Payment?
On the other hand, making late payments or missing them entirely can hurt your credit score. Payments over 30 days late are typically reported to credit bureaus and can lower your credit score.
Debt-to-Income Ratio
Finally, your monthly lease payment is factored into your debt-to-income ratio. This number is considered by other lenders when you apply for other forms of credit.
Lease a Honda Vehicle in Parkville, MD
When you manage your Honda lease responsibly, it’s an excellent way of building credit. For more information about leasing or to start your Honda lease, visit Heritage Honda Parkville today!
