What People With Chronic Illness Need to Know About Credit

I was “fortunate” enough to grow up in a family that has a lot of money troubles. I knew what it meant to receive unemployment benefits when I was 9, could explain the intricacies of Medicaid at 10, and knew how to file my own reduced-price school lunch paperwork at 11.

The repercussions of financial stress at a young age and early maturation aside, I use the term “fortunate” because I am genuinely thankful that I entered college and the working world knowing about the world of credit, especially once my health care became more complicated.

As folks experiencing chronic illness know all too well, being sick is expensive and credit reporting in America is a complicated and confusing system that is not made to benefit the people who use it. Taking care of our health can take up the majority of our time and energy already, so learning the ins and outs of a super complicated credit reporting system might just not be feasible.

Does this sound like you? You’re not alone. Here’s what you need to know to get started navigating the hellscape that is U.S. credit reporting.

Let’s start with the basics: What is a credit report?

Credit reports are statements that contain almost your entire financial history. Creditors, such as credit card companies and loan servicers, report your financial data to credit bureaus (more on that below). Different creditors may report to different credit bureaus. Your credit report usually contains personal information, including your social security number, any and all credit accounts you either have or have had in the past, public records, including foreclosures, bankruptcies, and civil lawsuits, and the names of companies that have requested your report.

There are three major credit bureaus: Equifax, TransUnion, and Experian. These agencies are responsible for compiling your credit scores and creating your credit reports, which lenders then use to examine your payment history and deem your “creditworthiness.” Your payment history is super important in the world of lending because it shows the lender that you make payments on time and take responsibility for the debts you accrue. Credit scores can vary across the different credit bureaus and different lenders may use different scores. Each credit bureau creates their own credit report for you. It’s an unfair and terrible system, I know.

What makes up your credit score?

Your credit score is the synthesis of the information in your credit report, wrapped up in a number typically ranging from 300-850, with 850 being the best possible score. An excellent credit score ranges from 720-850. The major items comprising this number are credit utilization, type of credit, the number of debts you’ve taken on in a certain period of time, your credit history, and hard inquiries (pulls of your credit score when taking out a new loan or applying for a new, not pre-approved, credit card).

How long does information stay on your credit report?

Generally, negative information remains on your credit report for seven years. The negative outcome of a lawsuit can stay on your report for either the duration of the statute of limitations or the seven-year limit, whichever one is longer. If you declare bankruptcy, that information stays on your credit report for up to 10 years. Even when the negative information no longer appears on your credit report, the credit bureaus can retain the information indefinitely.

The exceptions to the seven-year rule are if you apply for a job that would pay greater than $75,000 a year or if you apply for greater than $150,000 in credit or life insurance. In these instances, the employer or lender can access all of your credit history, including the negative information that is more than seven years old.

PSA: If a company offers to “fix” your credit report in exchange for money up front, do not accept their offer. This is a scam.

I’m not going to sugarcoat it: The credit system sucks.

But you are not alone. Schools should include lessons on credit systems and lending practices as part of their core curriculum. The only way a lot of folks learn about these topics is by being thrown into the credit reporting system without a full grasp on what’s happening (enter: young me). Hopefully, the information I’ve shared equips you with the knowledge and confidence you need to learn more and advocate for yourself in the financial realm. We’ve got this!

More Resources for Managing Finances With Chronic Illness

For more information, check out the following resources and stories:

5 Tips for Becoming Financially Equipped for Living With Chronic Illness
Her First $100K has amazing information about which credit cards to use, tackling debt from all different sources, and how to prioritize your mental and financial health.
5 Ways to Control Your Anxiety About Finances
NPR’s LifeKit has answers to all of your money questions.
We Need to Talk About the Financial Impact of Being a Spoonie
How the Broken U.S. Healthcare System Is Breaking My Family