Car rental agencies may run a credit check when you rent a vehicle with a debit card, but don’t worry: It won’t do much damage to your credit score
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Dear Credit Score Report,
I have a question about how credit links to car rental companies. While I do know they make a hard inquiry into your credit (which is reasonable, considering half of them loan you new cars), what I don’t know is how much of a dip your credit score takes because of this. Also why does a rental inquiry remain for two years, assuming one returns the car in a few days? — Srivatsan
Although you may have heard otherwise, it’s not standard procedure for car rental agencies to check the credit histories of prospective drivers. But there are exceptions, such as when you rent with a debit card. In that case, some agencies may perform a credit check that — like any hard inquiry — will remain on your credit report for two years, although any impact to your credit score will be limited and diminish over time.
That’s why it makes sense for the rental agency to see if you’re a responsible borrower before lending you a vehicle. By reviewing your credit report, the rental agency can feel more confident about allowing you to rent with a debit card. “By checking a customer’s credit, we are better able to determine if there is an unacceptable risk in accepting a debit card for payment,” Pereira says.
You’re correct that such a credit check can affect your credit score. Hard inquiries made by any company can impact your credit score — but usually not by much. As explained on FICO’s website, your FICO score will probably decline by less than five points following an individual credit inquiry. As with all hard inquires, a car rental agency’s credit check will remain on your credit report for two years, although its impact will lessen over time as you exhibit other responsible borrowing behavior. After one year, it will no longer affect your FICO score. “FICO only pays attention to hard inquiries up to 12 months old,” says company spokesman Craig Watts.
In other words, credit checks typically do less damage to a borrower’s credit score than the damage an irresponsible driver could do to a rental agency’s vehicle.
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