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(image: https://live.staticflickr.com/7871/32914533788_cc037eb00c_n.jpg)Disability and Access to Credit: Why Scores Are Key in a Time of Crisis
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Credit Access and Disability: Why Scores Are Key in a Time of Crisis
A good credit score can allow you to get lower-interest loans and credit cards to help pay your bills in times of emergency. Here's how to get started.
by Caitlin Mims Content management specialist Credit score, credit cards Caitlin Mims is a management specialist for the credit cards team of NerdWallet. Prior to joining NerdWallet she worked as the editor of CreditCards.com and Bankrate. Caitlin is a writer on personal financial matters for the past seven years. She has written about credit cards the credit score, retirement planning , and the financial struggles women confront. She is from Denver, Colorado.
Updated Aug 15, 2022, 7:33 PM PDT
Editor: Kenley Young Assigning Editor Credit score, credit cards Kenley Young directs daily coverage of credit cards for NerdWallet. Prior to that, he worked as a homepage editor and digital content producer at Fox Sports, and before that a front page editor for Yahoo. He has decades of experience in both digital and print media. This includes stints as an editor at the copy desk, a wire editor and a metro editor for The McClatchy newspaper chain.
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From the time Erin Noon Kay was little Her mom taught her how to manage money. It's a great practice for any parent to do however for Noon Kay it was essential. She was born with cerebral palsy. And in addition to regular budgeting she also needed to be able to navigate the complex government benefits system.
Noon Kay who founded Claiming Disability, a company that helps people with disabilities via outreach and media representation explained that a lot of people who are disabled don't manage their finances themselves. Instead their finances are managed by a nonprofit as well as their families, which means they aren't taught the techniques to manage their finances by themselves.
"I don't think we're providing disabled people with a benefit in trying to shield them from the realities of their own lives," says Noon Kay 33. "Like the way my mother had protected me from all the realities of life it would have been a major shock."
An often-overlooked area of financial management is the credit. Being able to score a credit score ( of at least 690) means being able to access options in an emergency -- in the event that, for instance, you lose your job or are unable to work.
But people with disabilities are less likely to be employed full time and tend to earn less on average than those who do not have disabilities, according to Tom Foley, executive director of the National Disability Institute, or NDI. He also speculates that the disability community is among the most groups, making emergencies harder to manage.
For some, getting into debt is the only option
In the end, the solution may not be easy as simply cutting back on expenses: If you have disabilities, certain expenses that are often seen as luxuries are absolute necessities.
Foley provided an example of an air conditioner going out in the middle of the summer. If you suffer from a disability and reside in Georgia and need to fix it, this is not a luxury; it's likely necessary to survive. However, if you are a poor creditor (FICO scores of 629 or lower), your options for securing such coverage aren't as good.
"It's everything kind of conspiring to put an individual in a very precarious economic situation, which makes it much more difficult to manage any debt," says Foley.
In 2017, an NDI analysis of survey data from the Financial Industry Regulatory Authority, also known as FINRA, found that people who have disabilities are significantly less likely to use credit cards than the general population and are much more likely to be struggling with debt and use "alternative credit services" like pawnshops and payday loans. Payday loans are often accompanied by APRs of up to 300%..
If you have bad credit, or no credit at all, chances are that will be easier than paying off. For those with good credit, they are able to take advantage of better options such as low-interest loans and 0% intro APR credit cards.
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How to begin building credit
The process of building credit isn't always easy when you're struggling financially. But it's not impossible. It's all down to knowing how to deal with any debt you incur. In fact, Noon Kay credits her mom's financial lessons with the credit she enjoys today.
Here's how to get started:
Create an account that is listed to the credit bureaus
The majority of credit scoring models do not keep the track of utility or rent payments, but credit cards and loans are usually reported to the . The use of a credit card is one of the easiest ways you can be sure that your credit card will help your credit and there are alternatives for people with low or no credit. (More on that below.)
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Make timely payments
If you've got an account that's reported to credit bureaus, be sure to make your payments punctually because it's one of the most important elements in your credit score. If you've got a credit card and you're not required to pay the whole balance. If you make your minimum monthly payment, you'll be able to protect your credit.
Remember to pay the minimum amount . The interest rate on credit cards is most likely to be less than a payday loan however, the APR could sit in the double digits.
If you're having difficulty paying your minimum payment make sure you call your credit card provider first. The issuer may have a plan to help lower 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 poor, you might have some difficulties getting approval for many credit cards, including most rewards cards. However, there are some options
Secured credit cards
In contrast to other credit cards, you must make a cash deposit prior to. After you've closed the account with good standing or if you are able to convert it into a traditional unsecured card through responsible use over time , you'll be able to get your cash back. Major issuers like Capital One and Discover offer secured credit cards.
Since the deposit reduces card issuers' risk this makes it easier for those with bad or no credit score to get accepted. In reality, it's possible to find secured cards that are bank account -- although they may come with other negatives, such as annual fee or no upgrade options to cards with higher tiers.
Credit cards that are 'alternative'
Based on your credit scores You may be eligible for an unsecured that can use nontraditional underwriting standards to make approval decisions. These cards might take a look at your credit history however, they'll also take into consideration other factors like income, employment and bank information.
It's not the most suitable option for all. If you're on a you may face some difficulties being approved. But it's an option to think about when your credit score is weaker than the other financial histories of your.
Become an authorized user
You may also earn credit by registering on the credit card of someone else. You'll need to find someone who has good financial habits and pays every payment on time, because you're building credit by piggybacking off their account.
As an authorized user, you'll have the card you want and purchase using it, though it's not required. However, your credit could see a benefit without you ever needing to use the card.
But authorized users typically don't have the authority to make any changes to the account, nor are they responsible for the payment made on the account. This responsibility falls to the account's primary holder which is why it's important to both of you to set rules and expectations prior to the time of your meeting. If you accumulate costs that your primary account owner cannot pay back either of you will suffer negative impacts to your credit score.
About the writer: Caitlin Mims is a content management specialist at NerdWallet that covers credit cards. Previously, she was the editor of CreditCards.com.
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