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Renting a Car – Does it Hurt or Help Your Credit?

Once you have visited a car rental agency, you have found a lumpy list of rules and requirements to which customers are subjected. It all starts when your debit card for the car you reserved well in advance of your journey is handed to you only to have the clerk notify you that they require twice the amount of your rental deposit. They will also carry out a background review to ensure that you meet their minimum certification requirements. Now you're going to inflict an unwelcome "pull" on your credit score, besides eating in your trip money. 

Why do you care about your credit score in car rental? 

When you pay for a gift card, your credit score doesn't even care about car rentals. Yes, a car rental service is unable to claim your checks if you borrow a credit card instead of a debit. Potential borrowers with an active credit card pose less risk from the point of view of the rental agency. Consumers with a debit card at their discretion are considered to be at the lower end of the credit spectrum, so if the vehicle is harmed, it could be more difficult for the client to reclaim the loss. 

That's why an operator carries out a credit check if you use a debit card for your rental. 

How to find how it impacts your credit score? 

Consumers do not necessarily have a credit card at their fingertips for different reasons. If you decide to rent a debit card, a credit check will be made by the rental company. It might be a hard inquiry of your credit report, depending on the type of credit check that the company does. This can reduce your score a few points temporarily, but will not have a permanent effect on your report. 

Hard inquiries typically only show a 12-month period in your report. However, if you plan to apply to a primary lender in the near future, it is a good idea to minimize your hard questions. Too many enquiries could demonstrate that potential lenders have higher borrowing risk and a negative effect. 

Is it possible to avoid a credit check? 

The best way to avoid the credit check requirement is to use a credit card during your car rental process. Most companies will give you the option of securing your vehicle with a credit card but then pay it back with debit or cash. This would help reduce the waiting time for the deposit refund and discourage excessive background checks. 

If you are on the way and do not trust your credit card authorisation, talk to your bank about a secure credit card. The card issuer needs to deposit funds to enter the credit line if the cards are safe. There is no need for credit checking as your own money backs the card. This form of card will also help to restore your credit score if handled carefully. 

Relaxation of the rental process. 

The last thing you want is to believe that you have a planned rental only to reach your destination and realize that you're stranded without a vehicle. Call ahead and confirm what kind of payment they accept before you get to the location. Check credit, deposit and paperwork requirements along with any limits on age and miles and you know what to do. The cheapest option is not necessarily renting with a debit card, so shop around and find the best deal for you and your situation.

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