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Lease Termination

Mark Cappel
UpdatedJan 19, 2010

How long will a lease termination appear on my credit report, and how badly will it harm my credit score?

I have a 756 credit score now and I'm thinking to let a leased car go back. How bad will a lease termination affect my credit score and how long will stay on my credit report?

A 756 credit score is worth preserving if possible. You do not mention if you have missed any payments or how much time is left on the lease. It appears from your credit score that you have at been consistent on paying all of your debt accounts. I am curious what has changed in your financial situation, and the other debts you owe. Lease termination may not be your best option. You may want to discuss your financial issues with the loan company to arrange for other payment options.

A voluntary surrender of your vehicle will likely impact your credit score with the same effect as a repossession or voluntary repossession. This means the lease termination will likely have a strong negative mark on your credit profile, especially because you have such a lofty score currently. My guess -- note my word choice -- is that your score will fall 150 points to around 600.

Lease Termination & Credit Report Rules

A lease termination will appear on your credit report for up to 7½ years.

Federal law (US Code Title 15, §1681c) controls the behavior of credit reporting agencies (CRAs). The specific law is called the Fair Credit Reporting Act (FCRA). Under FCRA §605 (a) and (b), an account in collection will appear on a consumer’s credit report for up to 7½ years. To determine when an account will be removed by the CRAs (TransUnion, Equifax, and Experian and others), add 7 years to the date of first delinquency. The date of first delinquency is shown in credit reports. Subsequent activity, such as resolving the debt or one debt collector selling the debt to another collector, is irrelevant to the 7-year rule.

Some debts have a reporting period longer than 7 years, including:

  • Tax liens: 10 years if unpaid, or 7 years from the payment date
  • Bankruptcy: 10 years from the date of filing (15 U.S.C. §1681c)
  • Perkins student loans: Until paid in full (20 U.S.C. §1087cc(c)(3))
  • Direct and FFEL loans: 7 years from default or rehabilitation date (20 U.S.C. §1080a(f)(1) and 20 U.S.C. §1087e(a)(1))
  • Judgments: 7 years or the debtor’s state statute of limitations on judgments, whichever is longer

The FCRA 7-year rule is separate from state statutes of limitations for debt issues.


Terminate the lease if you do not need any other loans or home mortgage in the near future, and you truly are unable to continue your lease payments and are unable to negotiate with the loan company, and want to risk your credit score, and your only option is to return the car. has previously discussed lease termination and credit scores:

 • Information on voluntary surrender of lease states that returning a vehicle will adversely affect your credit score and you may still be responsible for a deficiency balance if there is one.

 •  Advice on early termination of a car lease compares terminating a car lease to defaulting on a loan.

 • Foreclosure, Delinquency, Debt Settlement & Credit Scores explains how a credit score is damaged by certain negative events.

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




BBrian, Apr, 2012
Hello Bill. My wife and I are expecting a baby in a month. I have car lease and the car is a small car is not a family car. I have called the leasing company and try to work out so I can get a family car but they are not willing to do any thing. Not even to swap the lease. What should I do at this situtation. If a break the lease or have a voluntary repo. I am stuck.
BBill, Apr, 2012
What you are suggesting is certainly possible, and happens frequently. However, it is difficult to answer your question without knowing the numbers involved, such as the number of payments remaining in your lease, and any early buy-out option in your lease. Take your lease contract to a lawyer who has contract law experience and ask him or her to explain your options for terminating the lease early.
TTva Singh, May, 2010
Hello Bill, Thank you so much for this information. I was in the same situation (but my score is in the 730's) but your advice has helped ME decide... NO, I will not, CAN NOT - do this... I've worked too hard to bring my score up so I will continue my payments and not deal with -150 points on my FICO score!