Frequent car rentals with debit card shouldn't clobber credit

By Jeremy M. Simon

Credit Score Report

Jeremy M. Simon is a former staff reporter for CreditCards.com who covered credit reporting and scoring issues. Ask a question. 'Credit Score Report' stories

Dear Credit Score Report,
Great article regarding rental car companies and debit card credit checks. My question is: If the same customer rents several times a month on a debit card and gets several credit checks a month by the same car rental company, will their points triple? How does that work? - Jenny

Hey Jenny,
When you rent a car using a debit card, the rental agency may perform a credit check, causing a drop in your credit score. And while multiple credit checks can increase the damage, industry experts say it's unusual for car rental agencies to perform several credit checks on the same customer in one month.   

I'm glad you enjoyed my column on credit checks for car rentals. As I noted previously, when renting a vehicle with a debit card, car rental agencies may check your credit to determine how likely you are to make additional payments (such as for vehicle damage) if necessary. In other words, it's a precautionary step by the rental agency. These types of credit checks fall under the "hard inquiry" category, which can lower your credit score by a few points -- as opposed to a "soft inquiry," such as when you check your own credit, which has no impact on your score. Recent hard inquiries can "have a slight negative impact on scores. Multiple inquires can be slightly more negative," says Maxine Sweet, vice president of public education for credit bureau Experian. That means credit checks can add up. If you experience three in one month, for example, the damage to your credit score may triple.

But rental industry experts say repeat customers aren't likely to have their credit checked that often. "I do not know of any rental car company that runs a credit report multiple times in a short time period," says Sharon Faulkner, executive director of the American Car Rental Association.  

Why not? Faulkner says that if a customer has a good rental history -- such as always returning the car on time -- and the customer's employment status remains the same, it isn't necessary to repeatedly look at their credit reports. "Rental car software is capable of storing this information so you do not unnecessarily run multiple credit checks on one individual," she says. There's also a cost associated with performing multiple credit checks that may discourage the rental agency from checking too frequently. "Credit reports for businesses are not free and can be costly," Faulkner says.

But in the case of a specific company, it's worth making sure. Ask the car rental agency how often it performs credit checks on returning customers who use debit cards. Also, before signing any documents, carefully read them to see whether or not a credit check will occur. Taking these steps will help you know what to expect. 

Of course, if you rent cars from more than one agency, each could perform a separate credit check, since each agency won't already be aware of your credit history.  "This is not information that rental companies share with each other or any other organization," Faulkner says. (Some rental agencies, meanwhile, don't check any customers' credit. For example, Enterprise says its policy is to not run credit checks.)

Therefore, if you're concerned about losing some credit score points, find a rental agency that only performs a single credit check in a given time period -- and stick with it. Otherwise, you can always rent with a credit card.  

--Jeremy 

See related: 'Hard' inquiries have limited credit score impact, Credit check by car rental firm won't hurt score for long

Jeremy M. Simon is a former CreditCards.com reporter who wrote about credit scoring, economic data, credit card crime and other issues. He is based in Austin, Texas. He is a graduate of Vassar College and has previously worked for Thomson Financial in New York City, where he wrote about the stock markets, and Texas Monthly, as well as several publications in Austin.

Published: July 5, 2011

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