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Simple things that could be damaging for your credit scores

By Brian Anderson
Published: Thursday, June 2nd, 2011

Simple things that could be damaging for your credit scoresIt is a well-known fact that having credit card balances or making late payments can be very damaging for your credit scores. But there are other things that could be equally damaging for your credit scores. Even some of the very innocent actions can ruin your credit rating.

Using your debit card to rent a car

Some of us learn about these things the hard way. These seemingly unimportant things can have such a huge impact at times. If you assume that you are being very responsible by using your debit card which is linked to your checking account, then think again. You might think that the debit card will help in avoiding unnecessary credit card bills and hence use it in order to stick to a zero debt lifestyle. But that is not the case here – as someone who rented a car from Avis using the debit card, later realized.

Avis has a clause in its rental agreement which states that the company owns the right to pull up your credit report in case you use your debit card instead of the credit card. There are many other car rental companies who have contracts bearing the same clause.

This, many may feel does not make sense. As per the Fair Credit Reporting Act, the companies that pull out your credit report should have some permissible purpose – such as cases where you are trying to obtain a loan, employment, or credit.

However, renting a car does not come under any of these categories. So, quite obviously car rental businesses are viewing it differently. They are looking for extra protection for renting out the car to you. Under such circumstances, they could ask debit card users to simply pay up deposits upfront, instead of pulling out the credit reports. In general, this is what is done with those who use the credit card or pay using cash.

But in any case, after this costly mistake was committed by paying for the Avis car rental using the debit card, the consumer also received an alert via email from the credit monitoring agency notifying the individual that there had been an inquiry on the individual’s credit report from Avis. This led to a drop in the FICO score by a whopping 14 points! So, just watch out when and where you use your debit card. This is just one of the places you should never use your debit card, but there are many more.

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