Does A Car Accident Affect Your Credit Score?
A car crash can impact your credit score indirectly if it limits your ability to work and pay your bills. Victims with extensive injuries and damage may struggle to get to work as they normally would, making it harder to pay their bills over time. If you use a credit card or get a loan to help you through this time, that may negatively impact your credit score, especially if this continues over time.
If you have substantial losses, work with a Chicago accident lawyer who can help you pursue compensation for your losses.
Why a Car Accident Can Damage Your Credit Score
A serious car accident can result in numerous complexities that may create financial difficulty for you. Depending on your situation, you may experience the following:
Costly Medical Bills
These medical bills may make it hard for you to meet your financial goals. If you have severe injuries, hospitalizations, surgeries, and long-term rehabilitation needs, the costs can be difficult to keep up with. If you miss payments, especially on credit cards due to these high medical costs, that could negatively impact your score. Consulting a car accident attorney can help you seek compensation to cover these growing expenses.
Missed Time at Work
Victims who are unable to go to work for a period of time may face financial instability. A lack of wages could threaten your ability to pay rent or mortgage payments, keep your utilities on, or meet child care expectations. Falling behind on these loans and other obligations could negatively impact your credit score.
More Reliance on Credit Cards
Those who are not receiving a paycheck may turn to credit cards to meet financial obligations. As your credit card balances rise, your credit utilization may increase. That is the percentage of your credit limit you’re using. Using a large share of your available credit can lower your score, especially when your balance approaches the credit limit. A car accident lawyer can evaluate your full damages to help relieve financial stress.
Loss of Earning Capacity
Some people suffer long-term inability to work or work as much as they were due to their injuries. When this happens, victims may struggle to meet their financial responsibilities. This can negatively impact your credit score if you cannot pay what you owe.
Accounts Going to Collections
Unpaid loans and credit card balances may go to collections, and many negative entries can stay on your credit report for up to seven years. Illinois law prohibits consumer reporting agencies from including adverse medical-debt information in credit reports. That protection generally excludes ordinary credit card debt, even when you used the card to pay a medical bill. Check your reports and dispute incorrect entries.
Higher Car Insurance Costs
Your auto insurance premium may rise after an at-fault accident. Credit-based insurance scores are a separate factor insurers may use in Illinois when setting rates, subject to state restrictions. These scores help estimate insurance risk. They do not determine who caused the crash. A premium increase can strain your budget, but it does not itself lower your credit score.
Bankruptcy
Some people facing serious injuries and unpaid debts may consider bankruptcy. Getting behind makes it challenging to get caught up even once you get back to work.
Protect Your Credit and Financial Recovery After a Crash With the Help of a Chicago Car Accident Attorney
Avoid these risks when you can by seeking the help of a car accident lawyer. Your car accident attorney in Chicago can gather evidence, identify potentially responsible parties, and pursue compensation for the losses your case supports. To protect your rights and safeguard your financial recovery after a collision, contact Taxman, Pollock & Bekkerman for a free consultation.