Wednesday 29 November 2017

Does a Criminal Record affect Credit Report and Credit Score?

Does a Criminal Record affect Credit Report and Credit Score?

According to the U.S. Department of Justice, one in 20 Americans is likely to serve time in a Federal or a State Prison in their lifetime. The numbers are even higher in men than in women.

Everybody who has ever been convicted and served time in prison knows that the consequences will follow them in almost every aspect of life. Getting a job, planning a vacation or renting a place get increasingly difficult with the baggage in the form of a criminal record. But many people are wandering the same question: can a criminal record affect your credit score and does it show on your credit report?

What is a Credit Report

A credit report is made up of information about credit card accounts, loans, inquiries and public records. All your accounts, credit card spending habits and other details are there. The public record contains bankruptcies, tax liens, convictions, and foreclosures. This information is compiled to determine how you pay your credit obligations, both now and in the past.

Does Criminal Record Show on my Credit Report?

Fortunately, criminal records do not show up on your credit report. However, they might be included in any background checks conducted for employment purposes or by a future landlord. Current employers might also perform background checks periodically.
However, not every background check is guaranteed to show your criminal record. Some jobs require a criminal record check, while others do not. Either way, the employer needs to have a written authorization to perform a background check signed by the consumer.

Can a Criminal Record Affect Your Credit Score?

Your credit score is not affected by the fact that you’ve served time in a prison.
Agencies that calculate your credit score might include criminal records in the process. However, they are usually excluded, unlike other public records like tax liens and levies. However, having a criminal record might affect applying for credit. The bank might turn down your credit request if they deem that the loan might be risky due to your past charges. The same applies to business loans, where you usually need to have a clean record. Your credit application might be rejected due to a misdemeanor in your record, as these are recorded for life.
However, even if your crimes do not affect your credit score, any financial results of that crime does. For example, if you kill someone in a car accident that won’t show up on your credit score. But if their family decides to sue you, that will affect your credit score.

The best way to make sure that doesn’t happen is to pay these debts off as fast as you can. You should do this before your court date because even if you pay on the same day it will still show up on your report and affect your score. However, this information is erased after seven years, provided you’ve settled the debt. Additionally, they will be immediately erased if you’re granted full pardon for the crime.

Some infractions like speeding tickets and jaywalking are erased from your criminal record as soon as you have paid the fine. However, if you have committed any serious crimes and misdemeanors you may request to have your record sealed, which will prevent anyone from looking into it during these check-ups.  This is called expungement and civil clear any infractions, misdemeanors, and felonies from your record.

Having a criminal record undoubtedly carries significant repercussions, affecting various aspects of life including employment, housing, and even financial opportunities. However, when it comes to credit scores and credit reports, the impact of a criminal record is more nuanced. Criminal records do not appear on credit reports and do not directly affect credit scores. Instead, credit reports focus on financial behaviors such as credit card usage, loan repayment, and public records related to financial matters like bankruptcies and tax liens.

Nonetheless, a criminal record can indirectly influence one's financial standing. For instance, while your credit score remains unaffected by criminal charges, the financial consequences of legal troubles—such as lawsuits resulting from criminal actions—can harm your credit if not promptly addressed. Moreover, background checks for employment or housing may reveal criminal histories, potentially leading to difficulties in securing jobs or rentals, which can further strain one's financial situation.

To mitigate these challenges, individuals with criminal records should focus on maintaining strong financial habits and addressing any financial obligations arising from their legal issues promptly. Seeking expungement or record sealing for eligible offenses can also help reduce the visibility of a criminal record during background checks, thereby easing the pathway to financial and social rehabilitation.

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