Ask Bill your personal finance question

Pre-Pay Vehicle Lease & Credit Score

If I pre-pay my vehicle lease, will that give my credit score a quick, sharp boost?

Will leasing a car affect my credit score? If so, say I paid the entire lease up-front would it make a difference?

Read full question
Bill's Answer
(6 Votes) | Find Learn Save

  • Routine, on-time payments on a variety of accounts over several years will boost your credit score.

The Federal Reserve defines a lease as, "A contract between a lessor and a lessee for the use of a vehicle or other property, subject to stated terms and limitations, for a specified period and at a specified payment."

Generally speaking, a lessee will lease assets that depreciate in an effort to preserve capital and level out cash flow. It is certainly possible for a two parties to create a lease where the lessee makes a lump-sum payment at the start of the lease, but this is not customary because doing so defeats one of the purposes of leasing.

Vehicle lessors report the account activity of leases to the credit reporting agencies, generally speaking. This means that if you are current on your lease payments this will tend to boost your credit score. I am guessing that you may be thinking, "If I pay all of my lease payments in advance, that will really boost my credit score because if some is good more is better."

Unfortunately, that is not how credit scores work. Time is a key component. Repeated positive behavior is another. Paying a lease in one lump-sum is a one-time event. It will be a tiny blip on your credit report and score. Making routine, on-time payments on a variety of accounts over several years will increase your score meaningfully.

See the resource Time it Takes to Improve Credit Score to learn more.

I hope this information helps you Find. Learn & Save.



(6 Votes)

People also like to Read

Daniel Cohen

Credit Card Counseling | Credit card counseling has helped millions of people resolve their debt problems. Learn more about c... Read more >>

Betsalel Cohen

There are many ways to get debt help, and Bill has given advice on each one of them.... Read more >>

Mark Cappel

Learn all about credit card debt consolidation loans and find a reputable lender from - your source for saving mone... Read more >>

Daniel Cohen

Having an IRS tax lien or a State Tax Lien filed against you demands quick action. Free tips from ... Read more >>


1500 characters remaining