Most people are unaware of how everyday transactions affect their credit score.
Is renting a car one of them? If yes, then in what way?
Does A Car Rental Affect My Credit Score?
In short: Yeah.
A car rental is capable of affecting your credit and it’ll most probably be in a negative way. The good thing is that the effect on your score will most likely be minimal and short-lived. It can vary depending on how you make payments for the car and when you make them.
How Do I Minimize the Impact on My Credit Score?
The easiest way to do this is to avoid paying for car rentals using a debit cards. Most rental companies want a credit card for payment because it provides additional security in case of any damage.
Using cash or debit card for a purchase signals trouble to the company. They will then conduct what is known as a ‘hard inquiry’ to find out your rating.
If this happens, the inquiry will be registered in the system and will decrease your credit rating by around five or more points.
The good news is that if your credit score is high enough, a drop of five points shouldn’t be too concerning. The problem occurs when people have low scores and their score is further lowered because of a credit check.
Often, rental companies will refuse to lend them a car as a result and their score will have decreased for no reason.
In this case, you should try looking for rental agencies that don’t require a credit check. In the meantime, look for affordable credit repair services in your area.
Are There Any Additional Damages I Should be Aware of?
Any outstanding payments on your rental that are left unpaid for a long time may be sold off to a collector.
The collection agency might write up the outstanding amount to the credit agencies, which can damage your credit scores significantly. So make sure any outstanding dues, such as payment for incidental damage to the vehicle, are cleared as early as possible.
Can car rentals help build my score?
No, car rentals cannot help you build your score. But there definitely are other ways you can improve your score.
Oak Credit Repair offers quick credit repair services in the US. 93% of our clients are able to increase their scores by 10 points or more within 35 days.
For more information, give us a call at (248) 621.4488 or fill out this form for a free consultation.