diff --git a/services/identity/src/database.rs b/services/identity/src/database.rs
--- a/services/identity/src/database.rs
+++ b/services/identity/src/database.rs
@@ -739,6 +739,19 @@
     Ok(Some((username, password_file)))
   }
 
+  /// Returns an error if `user_id` does not exist in users table
+  pub async fn user_is_password_authenticated(
+    &self,
+    user_id: &str,
+  ) -> Result<bool, Error> {
+    let Some(user_item) = self.get_item_from_users_table(user_id).await?.item
+    else {
+      error!(errorType = error_types::GENERIC_DB_LOG, "user not found");
+      return Err(Error::MissingItem);
+    };
+    Ok(user_item.contains_key(USERS_TABLE_REGISTRATION_ATTRIBUTE))
+  }
+
   async fn get_item_from_users_table(
     &self,
     user_id: &str,
diff --git a/services/identity/src/grpc_services/authenticated.rs b/services/identity/src/grpc_services/authenticated.rs
--- a/services/identity/src/grpc_services/authenticated.rs
+++ b/services/identity/src/grpc_services/authenticated.rs
@@ -459,13 +459,13 @@
 
     debug!("Attempting to delete wallet user: {}", user_id);
 
-    let maybe_username_and_password_file = self
+    let user_is_password_authenticated = self
       .db_client
-      .get_username_and_password_file(&user_id)
+      .user_is_password_authenticated(&user_id)
       .await
       .map_err(handle_db_error)?;
 
-    if maybe_username_and_password_file.is_some() {
+    if user_is_password_authenticated {
       return Err(tonic::Status::permission_denied(
         tonic_status_messages::PASSWORD_USER,
       ));