One of the first things you may notice about renting a car is that you typically need a credit card. If you have a credit card, it is highly unlikely that the rental car company will feel the need to check your credit. It would be an additional cost to them as the retailer when your credit card company has already done the credit check before they issued your credit card.
So you may wonder, “Do I need good credit to rent a car?” The easiest answer is maybe. If you are using a credit card, then it is far less likely, but if you do not want to use a credit card or you can not use a credit card, then the likelihood increases greatly.
If you do not or can not use a credit card, then you are probably considering using your debit card. If you need to use a debit card to rent a car, a credit check may come into play. Most major car rental companies will let you use a debit card instead of a credit card. But do not expect to do it with the same ease as when you use a credit card.
There will likely be additional requirements and documentation that you may be asked to provide. In many cases, one of those additional requirements will be to have a car rental credit check.
There are many reasons that your car rental agency would prefer that you use a credit card instead of a debit card, but chief among them is that debit cards pose a higher risk to the car rental company. If you were going to take a greater risk on someone, you would definitely want to do your homework on them, right?
Your car rental company is no exception. You may experience different approaches to debit card use from different companies, therefore it is important as a consumer to know what to expect in general so you can make the right decisions for you and your situation.
Car rentals, debit cards, and credit checks
Car rental companies have different policies when it comes to debit cards in the first place, and some car rental companies operate in franchises that are free to set their own rules surrounding the company’s overarching policies and apply flexibility or tougher restrictions where applicable for their various locations.
While very few agencies will flat out refuse to rent a car solely on the use of a debit card, that does not mean it is magically easier to do it. Using a credit card is often a much easier option. Majority of companies that permit use of a debit card require at least one additional qualification to the standard qualifications of car rental. One of the additional qualifications required may be proof of insurance for debit card users.
You may also be facing a large hold on your debit card for the estimated amount of the rental and a security deposit. This can really tie up your travel expense funds. Companies may also require a credit check in order to use your debit card, and this one can be concerning to consumers.
When car rental companies run a credit check, they are typically not looking for a specific number on your credit score. More likely, they are looking for red flags. They do not want to see a ton of delinquent lines of credit opened within the last few years. Basically, they are trying to lessen their risk.
Let’s be honest, when a car rental company rents a car using a debit card, they are taking a credit risk. They could experience a financial loss if damages are incurred during a rental period because they have no way to recover the funds to cover the repairs.
Since the company cannot simply charge your debit card for what you owe as they could with a credit card, they may require that you allow a credit screening and a higher deposit in order to proceed with using a debit card.
On top of this credit check and extra deposit, a lot of companies will require additional identification like a passport, insurance card, or a utility bill as another layer of the credit verification process. Keep in mind that these credit inquiries will also slightly affect your credit score, so choose this option carefully.
If you do not meet the rental company’s credit check requirements, your options will be more limited. Your choices may be to not rent, pay in cash, use a credit card, or have someone else who is travelling with you and who qualifies to be the primary driver.
Speaking of credit check requirements, it may or may not surprise you that almost a third of Americans have a bad or poor credit score. The necessary credit check a car rental company has to perform can be a big deal for people in this situation, and it can be frustrating when your credit score is a deal breaker with the car rental company.
Because bad credit scores and poor credit scores means that the company is undertaking an increased credit risk for the rental, the agency will likely implement more scrutiny of the customer in order to offset that risk.
Your options may be limited, but don’t worry too much. It is more likely that if you find yourself in the same boat as a third of Americans, then you can still rent a car. Limitations or restrictions may apply, and this usually means that access to luxury lines or premium vehicles will be cut off. In most cases, you will be in an economy car or older model.
This ay sound like you are being punished for having poor credit, but that is not the intent of your rental car company. The company, as an entity that provides goods and services for consumers in the pursuit of a profit, has to mitigate risks wherever they can. They definitely want to meet your needs, but they have to operate in a logical manner.
Think of it this way, if you had two tools that you could lend to your new neighbor that you just met, you would likely let them borrow the tool that was less costly to replace. Your rental car company applies the same logic when faced with the choice of renting to customers when they have to view that customer through the scope of their credit score lens.
If you have made a personal promise to yourself to never use credit cards again in order to remain debt free, your efforts should be applauded. However, the process of renting a car may encourage you to make an exception for this type of transaction. Using a credit card when you rent a car makes the process so much smoother.
For starters, car rental companies will typically waive the credit screening requirement for credit card users, and the required deposits for credit cards is usually much lower than it is for debit card users. Additionally, if you use your credit card at the time of pick-up for your deposit, it may be possible to use your debit card at the time of drop-off. That is a win-win for debit card users. No credit check and lower credit card impact.
If you are concerned about your credit score when you are going to be renting a car, using a credit card is going to be the easiest option for your situation. However, if you believe you will have to use a debit card and take your chances with your credit check, it is important that you call around and do your research to know your options.
Summary
It is not uncommon to be concerned about your credit score when you are expecting to be analyzed for trustworthiness as a consumer by a company. It can be an intimidating feeling, but when it comes to car rental, it might not come to that.
If you have the option to use a credit card to secure your reservation, then you can likely avoid a credit check and the little ding it can cause to your credit score. If that is not the option that you feel comfortable with or you don’t have a credit card in your name, you can probably guess that you will face a credit check.
Don’t let your credit score intimidate you or make you think that your travel plans are ruined. You may have a credit check, but you also have reason to hope that you will soon be on your way to renting a car.
The good news here is that even with poor or bad credit, you can still likely rent a car if you have the right car rental company. If you prepare for the possibilities and choose the best options available to you, you can rent a car and be on your way with your credit check in your rearview mirror.
Sources:
https://www.thebalance.com/what-is-a-credit-check-4767514
https://traveltips.usatoday.com/rules-renting-car-21124.html
https://www.foxbusiness.com/features/how-many-americans-have-bad-credit
