Often in financial processes, one gets to hear terms like ‘credit score’ and ‘credit check’. Many people do not realise the importance of these credit scores because they fail to understand what they mean. So, what is a credit score?
A credit score is a 3-digit number within the bracket of 300 to 900. This number defines your creditworthiness and merit with regards to your history of payments. For agreements like loans and leases, the credit score is used by the lenders as a criterion based on which the loan is granted or denied. Many factors come into play while determining your credit score. Financers take into consideration your credit history, repayment behavior during your past EMIs and credit card dues. The closer your credit score is to 900, the higher is your reliability and easier is the loan process for you. A majority of financial institutions consider a score of 750 and above as an ideal benchmark to grant the loan.
Very similar to an auto loan, a credit check is a vital step taken by financiers even in a process like leasing a car. In a private car lease agreement, the vehicle is registered in your name. Hence a thorough check is done on your credit history and payments background. A low credit score indicates unreliability on your end and makes you a risk for the leasing company. In such cases, to protect themselves from a potential loss, the lessor may choose to charge you a little more. You can avoid this hassle by maintaining a good credit score. You can do so by making sure that you pay your bills on time, pay off your debts without delays and keep your credit utilization ratio low.
However, the situation is slightly different in case of corporate car lease. In such an agreement, the employer is the primary lessee and the employee is the secondary lessee. The vehicle is leased in the name of the business or the company and not you as an individual employee. Leasing companies often have tie-ups with various businesses to provide a vehicle fleet for their workforce. So, any kind of financial transaction that occurs is between the business and the leasing company, despite you being the ultimate user of the car. Not only that, apart from financial dealings, all legal dealings are also carried out between the business and lessor. Hence, all background and credit checks are done on your employer and not you. This means that you would still be eligible for a corporate lease despite having an average credit score yourself. This is of course if your employer has a tie-up with a car leasing company and you are eligibility to lease a car as per your corporate car lease policy.
This is why credit scores are vital in processes like car leasing. An ideal credit score makes such financial processes easier and often helps you get handsome advantages and deals from various car leasing companies. If you’d like to get yourself a drive soon, check your corporate car lease policy to see empaneled car leasing partners like ALD Automotive. Either you can get in touch with the Relationship Manager of car leasing company allocated to your corporate for more information on car leasing or visit their website.