Q: I recently traded in an old lease vehicle for a new one. The payment is slightly
lower on the new car than it was on the old car. When they ran my credit score,
it was 747. How much will my credit score drop with this new car lease I just signed? I thought of buying the car, but I would have to get financing for the purchase.
A: You have a very good credit score. While it isn’t in the top tier of 760 to 850 on the FICO scale, it is pretty close to that.
Your credit score tells me that you’re making a lot of smart moves when it comes to your credit history. You’re managing your credit well, paying your bills on time, and not taking on too much debt. Those are great things as you plan on leasing a new car.
Just because you traded in an old lease vehicle for a new car lease doesn’t necessarily mean your credit score will drop. It might stay the same. Or, because the payment is lower, your credit score might go up a bit.
Sometimes your credit score will drop temporarily and affect your credit history if you open up a new credit account. Your new car lease could be considered a new account and could negatively affect your credit score. When I opened up my last credit card, my credit score fell 30 points for about two months, and then popped right back to where it had been.
So if your credit score does drop, it shouldn’t stay down for long. Usually when you have a good credit history, you can rebound quickly from a small drop caused by taking on new credit, opening a new credit card, or, as in your case, buying or leasing a new car. In the meantime, make all of your payments on time, and in full (don’t just make the minimum payments). That’s how your credit history will stay strong.
Also, you might want to pull a copy of your credit score and credit history from AnnualCreditReport.com, or you can purchase a copy from each of the three credit reporting bureaus, Experian, Equifax, and Transunion or from MyFico.com.
Examine your credit history to see what issues might be causing your score to fall to around 750. You might be able to take some simple steps to cause your score to go even higher.
For example, if you find out that you have a card that has a high balance that you have not paid off and have the ability to pay it, you can pay down that balance and increase your credit score somewhat. The effect for you on your credit score should be minor. The important thing for you is to maintain a great credit history and avoiding those things that can give you poor credit and affect your credit over the long term.
By taking small steps on many fronts you might be able to increase your credit score over the next several months whether or not your credit score changes as a result of the purchase of the car.