When you or someone you love gets arrested, the last thing on your mind is the financial impact that arrest may have. Posting bail, paying bond premiums, court fees and fines can add up. An arrest can end up being expensive but can it affect your credit?
What is Credit & Why Is It Important?
Personal credit ratings are ranked by a 3 digit number ranging from 300-850. Your score determines whether you can get a loan or not and how much interest you’ll pay. But that’s not the only reason that number is important. Credit scores are also used to set payment amounts for your car and homeowners insurance.
Employers may check your credit history as part of your background check before hiring. Potential landlords look at your creditworthiness to determine who passes the requirements to qualify for a rental. Credit scores determine the price of your cell phone plan and whether or not a deposit is needed for utilities such as electric, water or internet/cable providers.
How An Arrest Can Affect Your Loan Eligibility?
Just to be clear, being arrested or serving jail time does not have a direct affect on your credit score. Criminal records are not reported to any of the credit bureaus but there are still ways your score can be negatively impacted by an arrest.
Failure to pay fines
If making payments were part of the conditions of bail or parole and you don’t pay those fines, eventually your information will be sent to a collections agency. Collection accounts are reported to the recit reporting agencies and can drop your score quite a bit.
Failure to pay the bail bonds company
Not paying your bondsman may result in late fees and eventually, your account may go to collections. Again, this is reported to agencies like Experian or Transunion.
Paying bail or bonds with credit cards
Making the payment for your release or bond with your charge card can increase your balance, dropping your score. If you go over your limit or increase your debt to income ratio, your rating drops. Failure to pay at least the minimum amount due on your credit card will be reported to the credit reporting companies and left unpaid, will end up in collections. All of this creates almost a chain reaction of incidences that lower credit scores.
Who Pays the Bills When You’re in Jail?
Another way your arrest can affect your credit score is that you are not working. Unless someone else is paying your bills while you’re in jail, they will go unpaid. The longer you stay in jail, the more in debt you’ll become. Once 3 months of non-payments is accrued, the past due accounts will be reported to the bureaus. This unfortunately has a recurring negative impact on your credit until you make a payment arrangement or start making payments.
Bills don’t stop just because you were arrested. Everything is still due: rent, utilities, mortgages, phone bills, groceries, insurance etc. This is a major reason why some people choose to contact a bonds agency to quickly get their loved ones out of jail.
Can Co-Signing a Bond Hurt My Ability to Get a Loan?
Paying a friend’s or family member’s bail bond won’t affect your credit score. However, what happens after they are released may impact your creditworthiness. If you can’t make the payments on the credit account you charged the bond on, this will obviously hurt your scoring. Also, if the defendant fails to show up for their court date it violates the bond agreement and whatever you put up as collateral, specifically a home or vehicle, can have a long-term negative on your credit.
Minimize Risks to Your Finances After Charging a Bail Bond
Many people borrow money for all kinds of things: mortgages, personal loans, auto buying, home improvements and so much more. Odds are that when you swiped your card to cover someone’s bail, the last thing you were worried about was your credit score and abi;lity to borrow money when needed. Paying for bail or bondsman fees will not affect your credit score. However, what happens afterwards may cause credit problems so if you do opt to use credit to pay for a bond, make sure you are able to pay the increase in payments and pay on time. If you are financially responsible, helping someone get out of jail should not affect your ability to be approved for loans, insurance or rentals.