The Importance of Credit Checks in Car Leasing
Leasing a car through Nationwide Vehicle Contracts is made as easy as possible by our administration team who will guide you through the whole process from start to finish, making the task of you getting your new car as smooth as possible.
But like all processes, there are finer details that need to be supplied and discussed before the enjoyable business of choosing your new vehicle gets underway - and some of the most important involve (whisper it quietly) money.
As much as many people dislike doing it, answering questions about credit history, monetary matters and budgeting situations is an important part of the financial application process because the answers will have a massive impact on your leasing opportunities.
Which is why, whether you are looking to undertake Personal Leasing or Business Leasing, it is important for you to know whether or not you are eligible for leasing finance - and if so, which of the two options suit you personally. To helps you find out whether or not you meet the financial criteria, we ask you fill out a finance eligibility quiz before the leasing process starts.
The Personal Finance Eligibility Quiz requires you to answer some quick questions about your age, your current address, your work status and part of your financial history to determine whether or not you would be accepted for Personal Vehicle Leasing, before we discuss the finer details of the application.
The reasons why we ask these questions have been covered before in a previous blog "Personal or Business Leasing: What is the Difference?" but it basically boils down to confirmation of your identity and your ability to afford the finance deal for which you are applying.
The same thing applies if you are looking for Business Leasing Finance where the Business Finance Eligibility Quiz asks questions about your business including type of company, how long you have been trading and some financial history details before getting into the nitty-gritty of the application where the i-dotting and t-crossing will be carried out.
The reasons why we ask these questions have been covered before in a previous blog "Personal or Business Leasing: What is the Difference?" but it basically boils down to finding out more about your business and its ability to fund the finance deal for which you are applying.
Why is so much information required?
Whether you are looking for Business Leasing or Personal Leasing you may wonder why we need so much information before the leasing process can get going along the road that you want it to - and the answer is surprisingly simple.
Vehicle leasing is a form of credit - and this means that, when you apply to lease a vehicle as when you apply for a loan or other type of credit, the lender has to decide whether or not you are a good risk to lend to. So all the information that you supply is used by the lender to contact credit reference agencies to see if your credit score is acceptable.
Credit reference agencies are companies which are allowed to collect and keep information about consumers' borrowing and financial behaviour. When you apply for credit or a loan, you sign an application form which gives the lender permission to check the information on your credit reference file. Lenders use this information to make decisions about whether or not to lend to you. If a lender refuses you credit after checking your credit reference file they must tell you why credit has been refused and give you the details of the credit reference agency they used.
According to the Citizen Advice Bureau there are three credit reference agencies that are used on a regular basis by lenders - Experian, Equifax and CallCredit - all of which keep information about you that a lender can consult one or more of them when making a decision. Information that they hold includes:
- Addresses (via the Electoral Roll) including everywhere that you have lived
- Public Records including court judgments, bankruptcies, home repossessions and IVAs, Debt Relief Orders and Administration Orders (in England, Wales and Northern Ireland.) In Scotland it includes decrees, sequestration orders, DAS Debt Payment Programmes and Trust Deeds
- Details on bank accounts and loans you may have had, including financial management and repayment timings
- Details of people you are financially connected to, including joint credit applications and joint accounts.
- Details of previous searches on your credit file and the companies and organisations that have looked at information on your file in the last 12 months
Using all this information and the details supplied on the Application Form, the lenders create an overall Credit Score for you (or your company) which is then used to determine if you are a viable risk to lend to. Your Credit Score is compared against each lender's threshold level for credit scoring, and each creditor has a different level - but if your score is below their threshold, you may be refused OR you may get charged more if they do agree to fund your finance.
Lenders won't tell you what your score is but they must tell you which credit reference agency they used to get the information about you if you ask - and then you can check to see if the information they used is right. You have to pay a small fee of £2.00 to get what is known as a statutory credit report and if there is incorrect information on there, you can correct it by writing to the credit reference agencies and asking for it to be changed.
And when it's all done.....
Once all the financial details have been sorted out, the simple process of choosing and ordering your vehicle can begin.
Take a look at our Vehicle Order Process to see just how easy it is.
The hard part is choosing the vehicle!