The short answer is that, on face value, going to jail does not necessarily affect your credit. A prison or jail sentence does not show up on your credit report, and no creditor needs to know that you have been sentenced.
Many people are surprised to learn that a stay in jail doesn’t affect credit. After all, a stint in jail or prison affects all other parts of a person’s life for years after the fact.
However, a stint in jail can still wreak havoc on a credit score even though a sentence is left off your credit report. Many people leave behind outstanding debts when they are incarcerated, and few if any jails will counsel incoming inmates about their finances during intake. Also, for many inmates, a jail or prison sentence comes at them unexpectedly, leaving them with no time to make arrangements to protect their credit or other financial interests, or obligations.
Also, a credit score is made up of many different factors, all of which can be indirectly affected by going to jail. For example, payment history makes up 35 percent of your score, and making on-time payments while incarcerated may be next to impossible.
If you are facing jail time, thinking about your outstanding debts and your credit score may be the last thing on your mind as you prepare to serve your sentence. But, addressing these concerns before you go in may make your post-jail life easier.
How to reduce the financial damage of going to jail
The amount of preparation you should take depends on how long you will be in jail. Long sentences put your accounts at risk of cancellation due to inactivity, even if your account is in good standing; others who are serving a shorter sentence can get by with minimal planning. Generally, some tips to minimize the financial damage of going to jail regardless of your conviction may include:
Appointing someone you trust entirely to handle your financial affairs
This is easier said than done and can be a gut-wrenching decision to make. There are countless stories of inmates who were taken advantage of by the person they chose to handle their affairs. The sad truth is that there is little an incarcerated person can do from the inside if the person they trusted turns out to be unreliable. Many people call on a family member or spouse to handle payments.
If you are fortunate enough to find someone you trust, you can set up a joint bank account with that person and fund it before you are incarcerated. While you serve your time, your joint account holder may make payments on your behalf and handle your financial affairs through this account.
Depending on your type and length of stay, you may also consider granting your trusted person power of attorney.
To avoid late payments on your credit cards, which may cause your credit score to tumble, call your creditors and explain to them that you may have some trouble getting payments in on time for a while. You do not need to tell them that you are going to jail. Your creditors will be more interested in making sure that they are paid than why you might be late and may be willing to work out a payment plan.
You should get as many of your financial affairs in order before you go in. You will not be guaranteed time or access to the internet to contact your creditors during your stay if something goes awry.
Some inmates serving long prison sentences may actually believe that they can ignore their debt. Surprisingly, in some cases, this can be true. The statute of limitations on time-barred debts means that by the time some inmates are released, their creditors can no longer sue to collect on an old debt. It varies by state, but the statute of limitations is anywhere from three to 10 years.
However, creditors can still request repayment even if the debt is time-barred, and the unpaid debt will show up on a credit report for up to seven years.
How Jail Affects Your Credit Score
While it may provide some consolation that a jail sentence or prison stay will not show up on your credit report, do not lose sight of the fact that the time you spend away from your life while in prison can wind up having a significant impact on your credit score nonetheless.
Once you get out, you can get to work rebuilding your credit while you restore your life. There is always light at the end of the tunnel for credit repair. Once you have regained your freedom, you can get started making credit repair part of your re-entry into the mainstream.
Many people come out of jail worse off financially than when they went in, making re-joining society difficult and frustrating. With some preparation, you can avoid becoming a statistic and can re-enter the mainstream with a fresh financial start.
Getting any debt problems off of your shoulders will allow you to concentrate on the myriad other things that will weigh on your mind as you face a stay in jail. Addressing your financial concerns before your stay will lessen the intensity of a common barrier to fully re-entering the mainstream.