How to establish credit for adults with disabilities

The credit landscape for Americans with disabilities is uneven.

More disabled adults (age 25 to 64) had applied for a credit card, personal loan or personal line of credit from a bank in the past 12 months than their non-disabled counterparts, according to a 2019 survey by the Federal Deposit Insurance Corporation.

But more disabled adults than non-disabled adults were turned down for credit or didn’t receive as much as they had sought, the survey found. And more disabled adults than non-disabled adults didn’t submit credit applications at all, because they feared being rejected.

Disabilities and access to credit

Complicating matters is that the typical American household with a working-age adult who has a disability pulls in less income than other households. And far fewer Americans with disabilities are employed than Americans without disabilities.

Credit experiences for Americans with disabilities

Many people with disabilities report feeling that “banks are not very interested in them as customers,” says Thomas Foley, executive director of the National Disability Institute, co-publisher of one of the foremost reports on access to credit for adults with disabilities.

“Someone who might be on federal disability benefits, for example, doesn’t see that banks consider them part of their target market,” says Foley, who is blind. “They not only feel that there’s a bias, but there almost is one.”

“If you have a disability and you roll into a bank or walk into a bank, and can’t even get into the building because of accessibility barriers, sometimes the financial industry really hasn’t seen people with disabilities as a piece of the market,” says Foley. “I do think that that’s beginning to change.”

Options for establishing credit for an adult with disabilities

Despite this perception, adults with disabilities shouldn’t feel they’re entirely shut out of the American credit system. There are ways to navigate the system in order to secure credit.

“Your biggest challenge has nothing to do with your body or your mind,” says Howard Dvorkin, chairman of Debt.com, who advises people with disabilities about applying for credit. “It has everything to do with your income and your debts. Lenders only care if you can pay back what they give you.”

Disabled Americans 20-64

Median annual income among U.S. households

Here are six ways for disabled adults to build credit.

1. Get educated about financial resources for the disabled

Foley points out that not all financial education resources can be easily accessed by people with disabilities. But they are out there.

For example, the National Disability Institute provides a variety of resources through its Financial Resilience Center to help people with disabilities manage money, create a budget, properly use credit and reduce debt. And the Consumer Financial Protection Bureau provides an extensive guide to assist people with disabilities in making smart financial decisions.

Plenty of local and regional organizations, such as the Illinois Council on Developmental Disabilities, also supply financial education for people with disabilities. It’s worth looking into organizations in your area.

“People with disabilities can and should have autonomy over their own financial lives,” says Foley. “When we talk about financial inclusion, financial inclusion needs to include people with disabilities, and people with disabilities are just as capable of managing their financial lives as anybody else.”

Foley emphasizes reliance on trusted sources, particularly within the disability community, when you’re educating yourself about money matters.

“There’s a lot of misinformation out there,” Foley says.

2. Focus on your credit score

Dvorkin notes that the bulk of a credit score comprises just two factors: how diligent you are about paying bills (35 percent) and how much money you owe (30 percent).

Someone with a disability can be more confident about applying for — and being approved for — credit if their credit score is good. FICO credit scores normally range from 300 to 850, with a score at 670 or above being labeled as “good,” “very good” or “exceptional.”

The higher your credit score, the more likely you are to be approved for credit and receive favorable lending terms, such as a lower interest rate.

If you concentrate on paying your bills on time and being responsible with how much credit you can use, you enjoy a better chance of getting the credit card, loan or line or credit that you’re looking for. If you’re new to credit, you might want to start with a well-reviewed starter credit card.

3. Explore a secured credit card

If you’re a person with a disability who’s found it tough to be approved for credit, consider applying for a secured credit card.

When you obtain a secured credit card, you must deposit cash into an account set up by the issuer of the card. The bank keeps the deposit and offers a line of credit matching the amount of the deposit.

Over time, you can build a positive credit history by using the secured card and making on-time monthly bill payments. Before signing on the dotted line, make sure the card issuer reports monthly payments to at least one of the three major credit bureaus (Equifax, Experian and TransUnion). If not, then your good payment history isn’t being tracked.

4. Look into a credit builder loan

Another way for a person with disabilities to establish credit is by taking out a credit builder loan. These loans are available from online lenders, credit unions and other lenders.

When you obtain one of these loans, the lender puts a small amount of money into a savings account. The borrower then pays back the loan in small amounts over, say, the course of six to 24 months. The lender reports your payment history to credit bureaus. Once the loan term expires, the lender returns the money to you in one lump sum.

5. Lean on technology

For people with disabilities who have ready access to a computer and a Wi-Fi connection, the increasingly tech-enabled process for submitting credit applications can be a blessing. That’s assuming the applications and other information can be easily consumed by a person who is, say, blind or deaf.

“I’m old enough to recall the days where you had to either go to a bank or fill out a paper application to get a personal loan or credit card,” says Dvorkin. “These days, it’s possible to do almost all of the paperwork online and on the phone. This makes it easier for everyone, but especially those facing physical or developmental challenges.”

6. Report inappropriate behavior

While credit card issuers and other lenders might enforce rules about dealing with customers who have disabilities, you might end up dealing with a company representative who’s uncooperative, or even rude.

“If you come across one, don’t hesitate to report it to the institution,” says Dvorkin. “Trust me, they want to know. Not only is their reputation on the line, so are their profits.”

If your experience amounted to outright discrimination, consider complaining to the attorney general’s office or banking regulator in your state, or reaching out to a federal agency like the Consumer Financial Protection Bureau. You might also ask for help from a program like the National Disability Institute’s Financial Resilience Center.

Understand your legal rights

It’s worth noting that the federal Equal Credit Opportunity Act does not single out people with disabilities as a protected group. The law does, however, prohibit discrimination against credit applicants on the basis of race, color, religion, national origin, gender, marital status, age, receipt of public assistance benefits or “good faith” exercise of rights spelled out in the Consumer Credit Protection Act.

Therefore, the Equal Credit Opportunity Act does capture people with disabilities who fall into protected categories like race or gender.

The bottom line

For people with disabilities, it may take some extra effort to establish credit and enjoy the benefits it can bring, such as better credit cards and access to loans. But if you live with a disability, you’re used to making that extra effort.

Experts say good credit is available, if you do the work. “Thankfully,” says Dvorkin, “reputable lenders don’t discriminate against anyone with a physical or developmental obstacle.”