Rental Car May Hurt Your Credit

Tuesday, April 23rd, 2013
Updated: April 23rd, 2013
The content is accurate at the time of publication and is subject to change.

If you have recently rented a car you may received quite a shock when you checked your credit report. Your normally good credit could receive some alarming negative items. After some research, you may be surprised to discover that a recent car rental was the cause of your lower credit score.

The reasons to rent a car can be different – perhaps for a vacation or to replace your repairing car – but your credit might be at risk when you rent. Be aware of how your credit could be affected, before you rent a car.

Know the upfront costs

Ask for an estimate of the costs you’ll be expected to pay prior to signing for the car. Rental fees add up like a snowball especially if you take the rental company’s insurance. The estimate will help you avoid any surprises. For instance, if you didn’t fill up the tank, the charge could be sent to a debt collector and that small amount could hurt your credit.

Your regular auto policy can cover the rental car. If your insurance company is paying for the rental, be aware of what the insurance company will and will not cover. Some companies only cover a certain amount of rental per day and others may not cover the “extra” insurance.

Ensure that you are insured

Insurance is one of the biggest costs associated with car rental. Before you rent, find out if you already have coverage, perhaps through your credit card or through your own car insurance. Know what is covered and what is not. Insurance from car rental may cost you a pretty penny. And if you damage a vehicle without having insurance, a rental car company could send the repair charges to a collection agency, which affects your credit as well.

Review the expenses

It is not rare that some renters drop off their car while the car rental office is closed. But this can lead to an unpleasant surprise later if the rental agency discovers damage, even if you didn’t do it. They have your credit card and all you have is your firm insistence that you didn’t cause the damage. This could hurt your credit by increasing your credit utilization ratio.

Rental car companies are lending you a vehicle worth thousands of dollars and they’re often lending it based on the fact that you have a credit card and a driver’s license. There’s no surprise that they are going to pass on any charges incurred to you. This might result in a higher than you expected credit card charge or even a debt collector’s notice.

If you are renting a car, make sure you’re aware of all possible charges and the condition of the car before and after you rent. Arm yourself with information so you know exactly what rights you have as a consumer. Doing this, you can smooth your rental and can lessen an impact to your credit report.

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