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Credit Access and Disability What are the importance of score in a Crisis
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Disability and Access to Credit The importance of scores in a Financial Crisis
Having good credit will allow you to obtain low-interest loans or credit cards to help you pay for your expenses in times of emergency. Here's how to get started.
Written by Caitlin Mims Content management specialist Credit score, credit cards Caitlin Mims works as a content management specialist in the credit cards team at NerdWallet. Prior to joining NerdWallet, she was an editor at CreditCards.com as well as Bankrate. Caitlin wrote about personal finance for seven years and has written about credit cards, financial scores and credit, as well as retirement planning and the financial struggles women confront. She lives in Denver, Colorado.
Updated Aug 15, 2022 7:33PM PDT
Edited by Kenley Young Assigning Editor Credit score, credit cards Kenley Young directs daily credit card coverage for NerdWallet. Prior to that, he worked as a homepage editor and digital content producer for Fox Sports, and before being a front-page editor for Yahoo. He has a wealth of experience in both digital and print media, including times as an editor at the copy desk as well as a wire editor as well as metro editor at The McClatchy Newspaper chain.
A majority of the products featured here are from our partners who pay us. This affects the products we review and where and how the product appears on the page. However, this does not influence our opinions. Our opinions are entirely our own. Here's a list of and .
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Since Erin Noon Kay was little Her mom taught her to handle money. This is an important idea for parents everywhere to learn but for Noon Kay it was crucial. She was born with cerebral palsy. Along with regular budgeting she had to know how to navigate the confusing government benefits system.
Noon Kay the person who started Claiming Disability, a company that helps people with disabilities via outreach and media representation -- explained that a lot of disabled people don't manage their finances themselves. Instead their finances are handled by a non-profit or by their family members, which means they can't acquire the necessary skills themselves.
"I do not think we're doing disabled people a service by trying to protect [them] from the reality of their own life," says Noon Kay, 33. "Like the way my mother would have sheltered me from all of these realities that would have been a huge shock."
One area that is often overlooked in financial management is the credit. Having good credit ( minimum 690) is having access to options in the event of an emergency should, for example, you lose your job or are in a position where you are unable to work.
However, those who are disabled are less likely to work full time and tend to earn less on average than people without disabilities, according to Tom Foley, executive director of the National Disability Institute, or NDI. And he speculates that the disabled community is one of the most groups, making emergency situations more difficult to manage.
For some, getting into in debt may be the sole choice
The answer isn't always as simple as spending less money when you suffer from disabilities, certain expenses which are often viewed as luxuries are absolute necessities.
Foley gave the example of an air conditioner going out during summer. If you suffer from a disability and live in Georgia fixing it is not a luxury; it's likely to be essential for your survival. If you have poor credit (FICO scores of 629 or lower) the options for covering such aren't as good.
"It's all these things kind of conspiring to put people in a fragile economic position, which makes it more difficult to manage any debt," says Foley.
In 2017, an NDI analysis of survey data from the Financial Industry Regulatory Authority, or FINRA discovered that those who have disabilities are significantly less likely to use credit card than general population and are far more likely to be struggling with financial burdens and also to utilize "alternative credit options" like pawnshops and payday loans. Payday loans are often accompanied by APRs of up to 300%..
If you are a person with bad credit, or no credit at all, chances are many options to pay off. But those with good credit have even better options, such as low-interest loans and low-interest credit cards.
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How do you begin building your credit
The process of building credit can be a challenge if you're in financial trouble. But it's not difficult. Most importantly, it boils down to knowing how to handle any debt you accumulate. In actual fact, Noon Kay credits her mother's financial education for the credit she enjoys today.
Here's how you can begin:
Open an account that gets reported to the credit bureaus
The majority of credit scoring models don't keep track of rent or utility payments, however credit cards and loans are usually disclosed to . Getting a credit card is one of the best ways to be certain that the account you choose to use will improve your credit score There are other options for those with weak or no credit. (More about that below.)
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Pay on time
Once you have an account that is reported to the credit bureaus make every payment promptly because it's one of the most important elements in your credit scores. If you've got a credit card and you're not required to pay off your whole balance. As long as you pay your minimum payment, you'll be able to secure your credit.
But remember: Merely paying the minimum amount . The interest on credit cards is likely to be much less than a payday loan however, the APR will still typically be in the double digits.
If you're having trouble making your minimum payment take the initiative to contact your credit card issuer first. The issuer may have a plan solution to lower your monthly payments and keep your account in good standing.
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Credit cards can aid
If your credit score is less than ideal, you might have some trouble getting approved for many credit cards, including most reward cards. However, there are some options
Secured credit cards
Unlike other credit cards, they require a cash advance upfront. After you've closed the account in good standing -- or are able to convert it into a traditional credit card that is secured by responsible usage over time -- you'll be eligible to receive the money back. Major issuers like Capital One and Discover offer secured credit cards.
Because the deposit lowers card issuers' risk and risk, it's much easier for applicants who have poor credit or no credit score to get accepted. In fact, it's possible to get secured cards which , or even a bank account -- although these products could have additional drawbacks, like annual fees or no upgrade paths to higher-tier cards.
'Alternative' credit cards
Based on your credit score depending on your credit score, you may be able to get an unsecured credit card that uses nontraditional underwriting standards in order to decide on approval. These cards might be able to take a look at your credit score, but they'll also consider other factors such as earnings, employment, and banking information.
It's not the ideal solution for everyone. If you're a high risk , you might have some trouble getting approved. But it's an option to consider in the event that your credit history isn't as strong as the other financial histories of your.
Become an authorized user
You can also build credit by becoming an on someone else's credit card account. You'll need to find someone with good financial habits and who makes every payment on time, since you're building your credit by piggybacking off their credit card account.
If you are an authorized user, you can get your own physical card and purchase with it, although that's not required. Your credit could be accruing benefits without ever having to use the card.
But authorized users generally don't have the power to make changes to the account or be accountable for making payments on it. That liability falls to the account's owner so it's a good idea for you two to set rules and expectations in advance. If you accrue fees that you can't pay, each of you may suffer negative impacts to your credit.
About the writer: Caitlin Mims is a content management specialist at NerdWallet which covers credit cards. Previously, she was an editor at CreditCards.com.
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