How Renting a Car With a Debit Card Can Impact Your Credit Score

In a recent post, I told you about the importance of reading the fine print – and how it can have implications for your credit rating.

Here’s another true story that shows the importance of reading the fine print.

In February 2009, I went to Tucson, Arizona, to serve as the keynote speaker for a YWCA personal-finance conference. About 500 women attended. It was a smashing success, and I met a lot of lively and interesting people.

While in Tucson I rented a car from Avis to get around town and thought nothing of using my debit card to pay my rental-car bill.

A few days after I returned to my home in New Jersey, I received an email notice from myFICO.com, the credit scoring company. I use FICO’s credit-monitoring service as well as the 3-in-1 service offered by FreeCreditReport.com (Read more about the benefits of credit monitoring).

In this case, FICO’s “Score Watch alert” was letting me know that there had been an “inquiry” on my credit report. The FICO alert also notified me that my credit score had dropped 14 points.

I was flabbergasted and suspicious. At first I thought that there must have been a mistake or that perhaps I was a victim of identity theft. I knew with 100% certainty that I had definitely not applied for credit of any form, so there should have been no “inquiry” popping up in my credit file.

I immediately clicked on the information sent from FICO and discovered that the inquiry in question came from Avis.

An inquiry from Avis? That’s puzzling and certainly not correct, I thought. I knew, of course, that I had rented a car from Avis, but I hadn’t requested credit or applied for a job, either of which would have given Avis the right to pull my credit file.

After a few moments of mulling the situation over, I decided to contact Avis directly. When a customer-service representative got on the phone, I really let her have it.

I wasn’t foul-mouthed or nasty, but I was certainly indignant and voiced my dismay that Avis had had the gall to pull my credit.

I told her that I was a person who tried to maintain excellent credit and that Avis had marred my credit file by causing my FICO score to tumble 14 points. The employee listened attentively, seemed as bewildered as I was about why a credit inquiry occurred, and got somewhat apologetic.

Oops! How Did I Miss That Clause In the Fine Print?

When I demanded to know what Avis was going to do about the situation, she transferred me to a supervisor, who also listened calmly as I explained my complaint.

“Why in the world would Avis do a credit check on me?” I finally demanded. Then the supervisor asked me whether I had paid with a debit card. When I said “Yes,” she patiently explained that actually Avis does have the right to pull the credit report of consumers who opt to pay with a debit card. Furthermore, she pointed out, Avis tells you this in the fine print.

At first I didn’t believe her. I’ve rented cars for years; I thought I read my contracts carefully; and I had even just opened a corporate Avis account for my business.

Moreover, in all my previous travel my credit report had never been pulled just for renting a car. “Show me where in the fine print Avis discloses this!” I practically shouted at the poor supervisor.

She searched and searched, and after a few minutes she guided me to the Avis website and pointed out this passage: “In most cases U.S. locations will perform a credit check for debit-card renters to determine credit worthiness at the time of rental. The renter must meet Avis’s minimum criteria in order to rent.”

“Oh,” I replied, as I sank bank in my chair. It was as if she’d drop-kicked me.

Then I gathered up my final bit of tempered outrage and added, “Well, I’m still upset about it. I think it’s ridiculous for Avis to do this, and I should’ve been warned about it when I rented the car.”

Despite my righteous indignation, during the conversation I pulled up the email confirmation of my reservation that Avis had sent. Sure enough, it too disclosed that same provision — buried in the fine print.

Somehow I had simply missed it, probably because I thought I was scoring such a good deal when I rented my car online. Little did I know that the real score I should’ve been worrying about was my credit score.

In my wildest dreams I never imagined that using my debit card could actually hurt my credit. On the contrary, I thought I was being more responsible by using my debit card instead of running up unnecessary debt on a credit card.

So remember this lesson: with any financial transaction whatsoever, always read the fine print. You never know how a momentary lapse could wind up hurting you financially or from a credit score standpoint.


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