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Credit Access and Disability The importance of scores in a Crisis
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Credit Access and Disability The importance of scores in a Financial Crisis
Credit score is a factor that can allow you to get lower-interest loans and credit cards to help you cover your bills in an emergency. Here's how you can get started.
Written by Caitlin Mims Content Management Specialist Credit score, credit cards Caitlin Mims is a management specialist on the credit cards team at NerdWallet. Prior to joining NerdWallet she worked as an editor at CreditCards.com and Bankrate. Caitlin wrote about personal finances for seven years. She has covered credit cards, financial scores and credit, as well as retirement plans and the financial struggles women confront. She is based in Denver, Colorado.
Updated August 15, 2022 at 7:33 PM PDT.
Written by Kenley Young, the Assigning Editor Credit score, credit cards Kenley Young oversees the daily credit card coverage for NerdWallet. Previously, he was a homepage editor and digital content producer for Fox Sports, and before that a front page editor at Yahoo. He has a wealth of experience in both digital and print media, with times as the chief of the copy desk, a wire editor and a metro editor of the McClatchy newspapers chain.
Many or all of the products featured here are from our partners who pay us. This impacts the types of products we write about as well as the place and way the product appears on the page. But, it doesn't influence our evaluations. Our opinions are our own. Here's a list of and .
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From the time Erin Noon Kay was little her mother taught her to handle money. It's a great practice for any parent to do, but for Noon Kay, it was essential. She was born with cerebral palsy. In addition to general budgeting, she had to be able to navigate through the confusing government benefits system.
Noon Kay the person who started Claiming Disability, a company that helps people with disabilities through outreach activities and media representation explained that many people who are disabled don't manage their finances themselves. Instead their finances are taken care of by a nonprofit as well as their families, which means they can't acquire the necessary skills themselves.
"I don't think we're doing disabled people a service when we try to shelter them from the realities of their own lives," says Noon Kay 33. "Like the way my mother had protected me from all of these things that would have been a huge shock."
One area that is often overlooked in financial management is the credit. Having good credit ( at least 690) is being able to access options in an emergency -- if, say, it happens that you are fired or become unable to work.
But people who are disabled are less likely to work at full-time and earn less per hour than people without disabilities, says Tom Foley, executive director of the National Disability Institute, or NDI. He also speculates that the disability community is one of the largest groups, making emergencies harder to manage.
For some, entering credit is their only choice
The solution may not be easy as simply cutting back on expenses: If you have an impairment, there are some costs that are often seen as essentials are actually necessities.
Foley gave the example of someone's air conditioning going out in the middle of the summer. If you're disabled and you live in Georgia fixing it is not a luxury; it's likely to be essential for your survival. If you are a poor creditor (FICO scores of 629 or lower) the options for securing such coverage are limited.
"It's everything kind of conspiring to put someone in a really precarious economic situation that makes it more difficult to manage any debt," says Foley.
The 2017 NDI analysis of survey data from the Financial Industry Regulatory Authority, or FINRA It found that people with disabilities are much less likely to utilize credit card than general population and are much more likely to suffer from debt and to use "alternative credit services" such as pawnshops or payday loans. Payday loans are often accompanied by APRs that exceed 300%..
If you have bad credit, or no credit at all, there are that will be easier than paying off. For those with good credit, they have even better options, including low-interest loans and 0% intro APR credit cards.
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How to begin building credit
Building your credit can be a challenge if you're facing financial difficulties. But it's not impossible. It's all down to knowing how to manage any debt you acquire. In reality, Noon Kay credits her mother's financial knowledge with her credit score today.
Here's how you can begin:
Open an account which is reported to credit bureaus
The majority of credit scoring models don't keep track of rent or utility payments, but credit cards as well as loans are usually disclosed to . Getting a credit card is one of the most effective methods to ensure that the account you choose to use will aid your credit score There are other options for those with poor or thin credit. (More on that later.)
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Pay on time
If you have an account that is reported to the credit bureaus, be sure to make your payments on time because that's among the most important factors in your credit score. If you've got credit card it's not necessary to pay the 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 rate on credit cards is likely to be much less than the interest rate of a payday loan however, the APR will still typically sit in the double digits.
If you're having difficulty paying your minimum monthly payment take the initiative to get in touch with your credit card company first. The issuer might have a offer to reduce the amount of your monthly payment and maintain your account in good standing.
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Credit cards can aid
If your credit is not perfect, you might have some trouble getting approved for many credit cards, which includes the majority of rewards cards. However, there are some options:
Secured credit cards
Contrary to other credit cards they require a cash advance upfront. After you've closed the account with good standing -- or are able to upgrade it to a traditional credit card that is secured by responsible usage over time -- you'll be able to get the money back. Major issuers like Capital One and Discover offer secured credit cards.
Since the deposit decreases the card issuers' risk this makes it easier for those with poor or no credit to be accepted. It's actually possible to find secured credit cards that , or even a bank account -- although these products could have additional drawbacks, like annual fees or no upgrade path to higher-tier cards.
'Alternative' credit cards
Based on your credit score You may be eligible for an unsecured that can use non-traditional underwriting criteria to make approval decisions. The cards will still look at your credit history and credit score, but they'll also look at other factors such as your income, job and bank information.
It's not the ideal solution for all. If you're on a you may face some difficulties being approved. But it's an option to consider in the event that your credit history is less than the other financial histories of your.
Become an authorized user
You may also earn credit by joining the credit card of someone else. It is best to inquire with someone who has excellent financial practices and makes every payment on time, because you're building credit by piggybacking on their account.
As an authorized user you'll be able to get your own physical card and purchase using it, though it's not required; your credit could see a benefit without you ever needing to utilize the card.
But authorized users typically don't have the ability to make changes to the account, nor are they responsible for the payment made on the account. That liability falls to the account's owner, meaning it's wise for you two to set rules and expectations in advance. If you accrue charges that the primary account holder can't pay either of you will have negative consequences to your credit.
About the author: Caitlin Mims is a content management specialist at NerdWallet covering credit cards. Prior to that, she was an editor for CreditCards.com.
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