When I Rented a Car, Did It Affect My Credit Report?

Renting a car is one of those weird things that can damage a credit score, depending on the payment method used and the policy of the rental car firm. A car rental typically only requires a credit check when the customer pays by a method other than credit card. While the inquiry from a car rental can lower a credit score, it probably won't be the reason for a rejection of credit.

Identification

Car rental firms almost always only perform a credit check when a customer reserves the rental with his debit card. This happens because debit cards have limits based on the amount of money in the holder's account, while credit cards usually have limits of thousands of dollars. If the debit-card renter crashes the car -- especially a new car -- he might not have enough money to pay for the damages and the rental company would have to pursue a court case. Rental companies understandably prefer responsible customers, and a good credit score is one sign of responsibility.

The Drop

Fortunately, renting a car with a debit card will probably not cause much damage to a credit score -- the maximum an inquiry can count for is five points, according to the Fair Isaac Corporation. Hard credit inquiries only become a serious problem if the borrower has more than five or six in one year. However, a lender probably won't deny a loan unless a report contains other negative items, such as missed payments and delinquent accounts.

How Long Does The Credit Check Stay?

Under the FICO system, credit checks only affect a score for the first year, even though the credit bureaus will report inquiries for two years. Other scoring models may factor in inquiries for a longer period of time. The Vantage Score model, sold by the national credit bureaus, includes inquiries in its formula for the full two years.

Tip

Ask the car rental firm about its credit check policies before you make a reservation. You can take out a secured credit card if you don't qualify for an unsecured line. Secured credit cards require a deposit equal to the credit limit, but you draw on the account's limit to make purchases, not the deposit, so it's not a debit account and can be used for car rentals.