Felony convictions can impact a person’s personal finances in a number of ways. This includes obvious expenses, such as fines and costs associated with hiring an attorney. But there are also subtle ways that felonies impact one’s financial situation. For example, many employers ask about criminal history or run background checks on potential employees and may use that information in hiring decisions. Talk to your attorney to see what you can do legally to help your own case(https://www.bradleycorbettlaw.com/). There are ways to you can get hired and on good terms after a felony.
But will having a felony on your record affect your credit score? The short answer is: not directly. But it may have indirect effects that are important to bear in mind.
What is a Credit Score?
Credit scores are used by lenders to evaluate the potential risk of lending to particular individuals. They essentially try to assess how likely a borrower is to pay their debts. Perhaps the most important credit score is the FICO credit score (https://en.wikipedia.org/wiki/Credit_score_in_the_United_States). This assigns each person a numerical score on a scale from 300-850. The lower the person’s score, the riskier it is to lend that person money.
What’s in a Credit Score?
Credit scores are determined based on a few key factors. According to the Fair Issac Credit Organization (the creator of FICO), scores are based on five main considerations (https://www.myfico.com/credit-education/whats-in-your-credit-score/):
The first is payment history, which looks at whether the borrower has paid off all their bills on time over the past seven years. Late payments detract from this score, so it is important to make sure you are consistently making payments on time. Payment history makes up 35% of the score.
The second category is amounts owed, making up 30% of the score. Carrying a lot of debt will make it harder for you to pay back lenders, and so higher debt loads tend to lower scores.
The next 15% is length of credit history. How old is your oldest account? And what is the average age of all accounts? Having a more established history shows you are dependable and raises your scores.
Another factor that lenders look at is how much new credit you have applied for. Applying for lots of new credit in a short period of time suggests you may be facing financial difficulties and is an indication of increased risk. This makes up 10% of your score.
Finally, lenders look at your mix of sources of credit. Being able to balance a large number of accounts of different types (e.g., credit cards, auto loans, mortgages) shows dependability. Greater account number and diversity raises your scores, making up 10% of your score.
As you can see, criminal history is not directly factored into one’s credit score. However, if you have incurred significant legal costs, or have faced difficulty attaining employment opportunities, you may have a high debt load, and may have a more difficult time paying your debts. You can definitely dispute some of these cases or your own score which can help to lower your score and repair your credit (https://vpcreditrescue.com/services/).
As long as you use the credit available to you responsibly, open new accounts slowly, and pay all of your bills on time, you can effectively prevent any of the indirect effects a criminal history might have on your credit score.