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Credit Access and Disability: Why Scores Are Key in a Financial Crisis
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Disability and Credit Access: Why Scores Are Key in a Crisis
A good credit score can help you get low-interest loans as well as credit card that can help you cover your bills in an emergency. This is how to start.
by Caitlin Mims Content Management Specialist Credit scores, credit cards Caitlin Mims is a management specialist on the credit cards team at NerdWallet. Prior to joining NerdWallet, she was the editor of CreditCards.com and Bankrate. Caitlin wrote about personal finance for seven years and has written about credit cards, the credit score, retirement planning , and the financial issues women have to face. She is based in Denver, Colorado.
Updated August 15, 2022 at 7:33 PM PDT.
Written by Kenley Young Assigning Editor Credit cards, credit scores Kenley Young directs daily credit cards coverage for NerdWallet. Before that, he was an editor on the homepage as well as a digital content producer for Fox Sports, and before being a front-page editor at Yahoo. He has a wealth of experience in digital and print media, with periods as an editor at the copy desk, a wire editor and a metro editor at McClatchy. McClatchy newspaper chain.
Many or all of the items featured on this page come from our partners who compensate us. This influences which products we feature as well as the place and way the product appears on the page. However, this doesn't influence our evaluations. Our opinions are our own. Here is a list of and .
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Since Erin Noon Kay was little, her mom taught her to manage money. This is a good practice for any parent to learn, but for Noon Kay, it was essential. Her birthmark was cerebral palsy. Along with regular budgeting she had to be able to navigate the complex government benefits system.
Noon Kay -- who co-founded Claiming Disability, a company that advocates for people with disabilities via outreach and media representation -- explained that a lot of disabled people don't handle their own finances. Instead their finances are handled by a non-profit or by their family members, which means they don't learn the skills for managing their own finances.
"I believe we're not providing disabled people with a benefit when we try to shelter [them] from the reality of their own lives," says Noon Kay, 33. "Like the way my mother would have sheltered me from all the realities of life that would have been a huge shock."
A frequently overlooked area of financial management is the credit. Having good credit ( of at least 690) is having options available in an emergency -- in the event that, for instance it happens that you are fired or are in a position where you are unable to work.
However, people who are disabled are less likely to be employed in full-time jobs and make less than those without disabilities, says Tom Foley, executive director of the National Disability Institute, or NDI. Foley also suggests that the disability community is one of the biggest groups, which makes the management of emergencies more difficult.
For some, entering in debt may be the sole choice
After all, the solution may not be as simple as cutting back on expenses when you suffer from disabilities, certain expenses which are often viewed as luxuries are absolute necessities.
Foley gave the example of someone's air conditioning going out during the summer. If you're disabled and you live in Georgia and need to fix it, this isn't an option; it's likely to be essential for your survival. If you have bad credit (FICO scores of 629 or lower) then your options for covering such are limited.
"It's all of these things that are conspiring to place people in a vulnerable economic situation, which makes it much more difficult to manage any kind of debt," says Foley.
The 2017 NDI analysis of data collected from the Financial Industry Regulatory Authority, or FINRA It found that people who are disabled are less likely to utilize credit cards than the general population, and are more likely to struggle with financial burdens and also to utilize "alternative credit services" such as pawnshops or payday loans. Payday loans can come with APRs of up to 300%..
If you have bad credit, or no credit whatsoever, the chances are many options for you to repay. However, those with credit are able to take advantage of better options including low-interest loans and zero-introductory APR credit cards.
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How to start building your credit
Building your credit can be a challenge if you're in financial trouble. But it's not difficult. It's all down to learning how to manage any debt you acquire. In actual fact, Noon Kay credits her mother's financial knowledge with the credit she enjoys today.
Here's how you can get started:
Open an account that gets reported to the credit bureaus
Most credit scoring models don't keep records of utility or rent payments, but credit cards as well as loans are generally disclosed to . The use of a credit card is one of the easiest ways you can be sure that your account will actually improve your credit score There are other options for those with weak or weak credit. (More about that below.)
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Pay on time
If you've got an account that is reported to the credit bureaus, ensure that you pay your bills on time because that's among the most important factors in your credit score. If you've got a credit card, you don't even have to pay the total balance. If you make your minimum monthly payment and you'll be able to secure your credit.
Remember to pay the minimum amount . The interest on credit cards will likely be less than an payday loan however the APR is likely to remain in the double-digits.
If you're struggling to pay your minimum payment take the initiative to contact your credit card issuer first. The issuer might have a to help lower the amount of your monthly payment and maintain the credit card in good condition.
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Credit cards can be helpful.
If your credit is poor You may have issues getting approved for a variety of credit cards, including most rewards cards. However, you still have several options:
Secured credit cards
In contrast to other credit cards, you must make a cash deposit prior to. When you have closed the account in good standing or you can change it to a conventional credit card that is secured by responsible usage over time -- you'll get the money back. Large issuers like Capital One and Discover offer secured credit cards.
Because the deposit lowers the risk for card issuers this makes it easier for those with bad or no credit to be accepted. It's actually possible to get secured cards that are bank account -- although such products may have other negatives, such as annual fee or no upgrade options to higher-end cards.
"Alternative" credit cards
Based on your credit scores depending on your credit score, you may be able to get an unsecured that can use nontraditional underwriting standards in order to decide on approval. The cards will still examine your credit history however, they'll also take into consideration other factors like income, employment as well as banking details.
This isn't going to be the most suitable option for everyone. If you're on a you might have some trouble getting approval. However, it's an option to consider if your credit history is less than the rest of your financial history.
Become an authorized user
You can also establish credit by becoming an on another credit card account. You'll want to ask someone with excellent financial practices and who makes each payment on time, as you're building credit by piggybacking off of their account.
If you are an authorized user, you'll be able to get an actual card to purchase with it, although that's not required. Your credit may be able to reap benefits without needing to utilize the card.
However, authorized users don't generally have the ability to make any changes to the account or be accountable for making payments on it. This responsibility falls to the account's owner, meaning it's wise to both of you to set rules and expectations in advance. If you rack up costs that your primary account owner can't pay back both of you could suffer negative impacts to your credit score.
About the author: 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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