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Renting a car doesn't help you build credit, but it could affect your credit scores in several ways. Some car rental agencies may review your credit report if you want to rent a car with a debit card, which could negatively impact your scores. Also, if you rent a car and wind up owing the rental agency money—and don't pay what you owe—the agency could send your account to collections, which may also hurt your scores. Read on for more about how renting a car can affect your credit.
How Renting a Car Can Impact Your Credit Score
When you rent a car, you're taking a valuable asset from the rental agency's parking lot. The agency wants some assurance that you can afford to pay your bills—for the rental and for possible additional expenses if you get in an accident.
For this reason, rental agencies tend to be wary of consumers who rent a car with a debit card rather than a credit card, and they may want to review your credit before allowing you to rent a vehicle using a debit card. The credit review can result in a hard inquiry, which could lower your credit scores. Fortunately, the impact of a single new hard inquiry is often small and short-lived.
Another way renting a car could impact your credit is if you wind up owing the rental company money. Perhaps you return the vehicle and pay for the rental, but lose your card later in the day. The company could have trouble charging you for incidental fees, such as for cleaning or damage to the vehicle. If the bill goes unpaid for long enough, the rental agency may send it to collections. The collection department or agency may report your collection account to the credit bureaus, which could hurt your credit scores.
Tips on Renting a Car Without a Credit Card
Renting a car without a credit card can be a little tricky. Some agencies don't accept debit cards or cash at all, and those that accept debit cards may run your credit. Additionally, if you use a debit card, rental car agencies will often place a hold on money that's in your checking account, and it could take a couple of weeks for the hold to be released.
Using a credit card to rent a car could be a better option, because rental car agencies don't generally require a credit check if you pay this way. Also, if they place a hold on funds, it could decrease your available credit limit but won't leave you with less cash in your bank account.
If you want to use a debit card:
- Call ahead to make sure the specific location accepts debit cards.
- Ask if the company will place a hold on money in your account, and if they will, make sure you have enough money for the hold, your trip and your other bills.
- Ask if there will be any restrictions. For example, some companies might not let you rent a luxury vehicle with a debit card.
- Look for car rental agencies that don't require a credit check.
If you have a credit card available but don't want to pay for the rental with it, another option may be to put your credit card on file when you first get the car. Then, when you return it, change your payment method to your debit card.
What Credit Score Do You Need to Rent a Car?
Rental car agencies generally don't list a specific credit score requirement for renting a vehicle, even if they have a minimum score requirement. Additionally, they may look for certain red flags within a renter's credit history regardless of credit scores—for example, if you have several accounts that are currently delinquent.
You may want to review your credit reports ahead of an upcoming trip to look for derogatory marks that could make it difficult to rent a car with a debit card. You can request a free copy of your credit report from each of the major credit bureaus—Experian, Equifax and TransUnion—once every 12 months from AnnualCreditReport.com, or get a free copy of your Experian credit report every 30 days.
Learn How to Build Your Credit
While renting a car won't help you build credit, there are many other ways to get started. If you're brand new to credit or rebuilding your credit, a secured credit card or credit-builder loan may be a good stepping stone. For those who already have open and active accounts, making on-time payments and keeping credit card balances low could help you improve your credit over time.