How to establish credit for adults with disabilities

The credit landscape for Americans with disabilities is uneven.

Low credit scores and lacking credit health are common obstacles for disabled people. In fact, the Financial Health Network reported in 2023 that fewer than half (48 percent) of people with disabilities have good to excellent credit scores, compared to 73 percent of people without disabilities.

That may be a reason why fewer disabled people have a credit card or loan than non-disabled people.

A 2021 survey by the Federal Deposit Insurance Corporation (FDIC) showed that fewer than half (48.4 percent) of working-age households with a disability had a credit card or personal loan from a bank, compared to 3 in 4 (75.7 percent) working-age households without a disability.

If you’re disabled or have a loved one with disabilities, you can still find ways to build credit — and gain access to financial instruments like credit cards. Keep in mind that reputable lenders shouldn’t discriminate against disabilities. As long as a lender is focused on your ability to repay credit, you can take steps to prove your creditworthiness.

Financial health of people with disabilities

Disabled people tend to face more obstacles than the everyday citizen, and personal finances are no exception. The Financial Health Network found that, based on an 8-factor scoring system, people with disabilities are less financially healthy than their non-disabled peers. And that includes their credit health.

“Accessible, affordable credit appears to be a particular area of need for the disability community,” the Financial Health Network reports.

In this case, disabilities include people who have trouble hearing; seeing (with glasses); concentrating, remembering or making decisions; walking or climbing stairs; dressing or bathing or doing errands alone.

Credit experiences for Americans with disabilities

According to a 2021 FDIC household survey on banking and financial services, the unbanked rate for people with disabilities was 14.8 percent, while the unbanked rate for working-age households without a disability was just 3.7 percent. Interestingly, however, 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 FDIC survey on the topic (the most recent survey from which data is available).

Further, the 2019 survey found that more disabled adults than non-disabled adults were turned down for credit or didn’t receive as much as they requested. And more disabled adults than non-disabled adults didn’t submit credit applications at all, out of fear of being rejected.

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. “Someone who might be on federal disability benefits, for example, doesn’t see that banks consider them part of their target market.”

“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, who is blind. “I do think that that’s beginning to change.”

Ways to build credit for a disabled person

Despite these obstacles, adults with disabilities shouldn’t feel they’re entirely shut out of the American credit system. There are ways to build creditworthiness and access 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.”

Here are six ways to help disabled adults to build credit.

1. Learn about financial resources for the disabled

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

For example, the National Disability Institute’s Financial Resilience Center helps people with disabilities manage money, create a budget, use credit responsibly and reduce debt. The Consumer Financial Protection Bureau (CFPB) offers financial empowerment tools for people with disabilities. Many local and regional organizations also supply financial education for people with disabilities. It’s worth looking into organizations in your area.

Foley emphasizes relying 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.

People with disabilities can and should have autonomy over their own financial lives. 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.

— Thomas Foley Executive director of the National Disability Institute

2. Focus on credit scores

Dvorkin notes that the bulk of a FICO credit score is made up of two factors: Payment history (35 percent), which is how you’ve paid your accounts over time, and amount owed (30 percent), which is the amount of debt you carry, especially how much of your credit line is used.

Someone with a disability can be more confident about applying — and being approved — for credit if they have a good credit score. The FICO® Score 8 is most commonly used, and the numbers range from 300 to 850. Scores 670 or above are considered “good,” “very good” or “exceptional.”

The higher the credit score, the more likely to be approved for credit and favorable lending terms, like a lower interest rate.

By making an effort to pay bills on time and use only the credit needed, people with disabilities can build their credit score over time. This might lead to a better chance of getting a credit card, loan or line of credit. Those who are new to credit might practice these credit-building habits with a starter credit card.

If you’re a family member to a disabled person, you could also add them as an authorized user to your credit card account. This can help them practice using the card and building credit without the consequences of being a sole cardholder.

3. Consider a secured credit card

People with disabilities who’ve found it tough to get approved for credit could consider applying for a secured credit card.

A secured credit card requires an up-front cash deposit. The card issuer holds on to the deposit and offers a line of credit that typically matches the deposit amount.

Over time, they can build a positive credit history by using the secured card and making on-time monthly 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). That way, the cardholder’s good payment history can positively impact their creditworthiness.

4. Apply for a credit-builder loan

Another way for a person with disabilities to establish credit is taking out a credit-builder loan. With these kinds of loans, the lender puts the loan amount into a savings account. The borrower then pays back the loan in small amounts, usually in a time from between six and 24 months. Once the loan term expires, the lender gives back the money in one lump sum.

The lender reports the borrower’s payment history to the credit bureaus, which helps build their credit score. A credit-builder loan is most helpful for people with little to no credit history.

5. 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 CFPB. You might also ask for help from a program like the National Disability Institute’s Financial Resilience Center.

6. Understand legal rights

It’s worth noting that the federal Equal Credit Opportunity Act does not single out people with disabilities as a protected group. However, the law does 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 cover people with disabilities who fall into protected categories like race or gender.

The bottom line

For people with disabilities, building credit may feel like swimming upstream. But tapping into financial education resources as well as credit-building tools like secured cards and personal loans can help with proving creditworthiness.

If you’re looking for a new card but struggling to be approved for the credit you need, these best credit cards for bad credit could help get your foot in the door. With responsible use over time, you could upgrade your card or apply for one with better terms.