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Content Manager

Bethany Hickey is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 

, Content Manager - June 1, 2021

During your auto lease term, your timely payments can improve your credit score. But what happens once you return the leased vehicle? Here’s how the credit scoring models look at closed accounts.

Car Lease Is Over: Credit Impact

Once you complete an installment loan or lease the account is eventually listed as “closed” on your credit reports. Although the account is no longer active, payments associated with that account are reported for up to seven years. This includes on-time payments and late/missed payments, and they can continue to influence your score during that time.

If your car lease is done and you return the leased vehicle without incident, within a month or so you’re likely to see the lease account reported as closed. Immediately after you return the leased vehicle, you aren’t likely to see a change in your credit score right away. It can sometimes take at least one month for changes to be reflected on your credit reports and then impact your credit score.

In some cases, borrowers see a slight drop in points after they close an account, because of the credit mix category in the FICO scoring model. This category keeps track of how many active accounts are being reported – and the more, the merrier, as long as they’re in good shape. The FICO credit scoring model favors borrowers with varied credit histories and accounts, so if you close one of your only active accounts listed on your credit reports, it could harm your credit.

In many cases, though, credit scores bounce back if you maintain a good payment history on the rest of your existing accounts.

More on Closed Accounts

It’s also important to note that a closed account can still have a balance due. If you ended your lease without paying the full amount owed to the leasing company, they can close the account for nonpayment and you’re still held responsible for the remaining lease balance. There are some circumstances where a lessee is required to pay excess wear and tear fees after returning a leased vehicle, and if not paid promptly, could result in some negative reporting action.

“Closed” isn’t always synonymous with “paid” or “done,” so it’s important to know your status with those accounts. If you still have a balance due on a closed account, work to resolve it as quickly as possible. Unpaid closed accounts can harm your credit score, and possibly be sent to a collection agency. Accounts in collections carry a lot of negative impacts on your credit score, as well.

Maintaining a Good Credit Score

Having active credit accounts reported on your credit reports is great for building a good credit score. Your payment history is the single most important factor in your credit score. Payment history is 35% of your FICO credit score, which is the most commonly used model among lenders of all types, including auto lenders and leasing companies.

When it comes to maintaining a credit score, paying your bills and loans on time is vital. A completed lease or auto loan can also increase your approval odds with future lenders or leasing companies, too, since you’ve proven your ability to repay credit on time.

If you're still struggling to maintain a good credit score, it may be worth your time to consider taking on some varied credit accounts or reviewing your credit reports to make sure everything is accurate. Errors can happen, and they can harm your credit reports in some cases. You can request a free copy of your credit report from each credit bureau (TransUnion, Equifax, and Experian) on www.annualcreditreport.com. The credit reporting agencies have been allowing this weekly access so borrowers can keep track of their credit reports during the economic turmoil of the pandemic. Weekly access to your free credit reports ends April 2022.

Need Bad Credit Lending Resources?

Auto leasing isn’t for everyone, and it often requires a good credit score. If your credit score is worse for wear and you’re in need of a vehicle, then work with us at CarsDirect. We want to help you locate a dealership that’s signed up with subprime lenders; they assist borrowers struggling with unique credit circumstances.

To get matched to a dealership in your local area, fill out our free auto loan request form and we’ll get right to work.


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, Content Manager

Bethany Hickey is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 

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