How an Accident Can Affect Your Credit Score

Bad weather in the winter can make driving terrifying. You may see lots of car accidents during snowstorms.

The Centers for Disease Control and Prevention (CDC) estimates that over 30,000 people die in car accidents every year in the U.S. These car accidents cost about $44 billion in medical care and work loss. And that’s only looking at fatal car accidents.

This figure doesn’t account for costs that lead to property damage, injuries and permanent disabilities. The cost of these accidents is mostly borne by insurance companies, victims and healthcare providers.

While walking away from a car crash with your life is a good thing, what many people don’t consider are the financial implications an accident can have on your credit score. You may experience some or several of the following:

  • Missed work due to injuries
  • Fired as a result of missing work
  • Huge medical bills
  • Car repair bills
  • Property damage and repair costs

All of these things can be a huge financial burden and have the potential to ruin your credit score. Even though the circumstances that lead to this kind of debt may not be your fault, you may still be responsible for a lot of the costs. Like any other debt, if you don’t pay it, it can negatively impact your credit score.

How a Car Accident Can Ruin Your Credit Score

Car accidents don’t directly impact your credit score. They aren’t reported to the credit bureaus. Your credit report only contains debt related information such as credit accounts and public records. If you incur debts from the accident and don’t pay them, they can be sent to a collection agency and hurt your credit score.

It’s important to regularly review your credit reports to make sure all the information on them is accurate. Your credit reports can also give you an idea if any car accident related debts are being reported that you need to resolve.

There are other ways that car accidents can hurt your credit score and your finances:

1.Your Car Insurance Premiums May Increase

Car accident claims can increase your insurance premiums. Even if you’re only partially at fault, your insurance company might start viewing you as a high-risk. The slightest increases can add up to a lot more money. If the accident was so bad that you need a new car, you may also end up paying higher premiums.

2. You May End up with Hefty Medical Bills

According to the World Health Organization, approximately 1.35 million people lose their lives each year due to road accidents. Another 20 – 50 million people suffer non-fatal injuries that may lead to disabilities and lengthy hospital stays. In many cases, you’ll find that your medical and car insurance cover the cost of your treatment to a point. After that, depending on how extensive your coverage is, you might be on your own. Depending on how lengthy and costly the ensuing treatment is, you may end up owing thousands of dollars in medical bills that could ruin your finances and your credit.

3. Car Repair Costs or Needing to Buy a New Car

If your car was damaged, you might have to pay for repairs. If it was totaled, you might have to pay for what you owed on the car and put up the money for a new car. Having to do either of these can result in hefty payments. Even if you have an emergency fund, the cost of the repairs or a new car can leave you a little less financially secure.

Luckily, there are ways to protect yourself against these unforeseeable circumstances.

How to Protect Yourself Against the Cost of Car Accidents

You might not want to think about the what-ifs of getting into a car accident, and you don’t know when one will happen. But it’s better to be prepared than not. Protecting yourself against the financial consequences of a car accident will take some work. Here are some tips that can help you protect your finances and credit score:

  • Have an emergency fund. It’s never a bad idea to save for emergencies. A good rule of thumb is to try to save 20% of your paycheck. If you can save enough money to cover six months’ worth of expenses, then you’ll be in better shape if you have a car accident.
  • Have a credit card for emergencies. Most Americans have more than one credit card. You can set one of those credit cards aside for emergencies only. If you do this, make sure that you try to avoid maxing it out. If you can, try opting for a credit card that has low interest, no annual fee, and a high credit limit. If your savings don’t cover all of your costs, then a credit card can be a good backup.
  • Get a loan. If there is going to be a significant amount of time between the accident and the settlement, you may find yourself needing money to get through. One other option is getting a personal loan to help with expenses. The interest rate will depend on your credit score and the lender you go through.

You also want to make sure your credit is in good shape. This goes for any circumstance, but can help if you get in a car accident. You can ensure that you have great credit by:

  • Keeping your utilization ratio under 30%
  • Paying your bills on time
  • Setting up automatic payments to ensure all your bills are paid on time

When you have a higher credit score, you’ll have access to loans or credit cards with good interest rates if you need to get one because of the costs associated with a car accident. Check your credit score for free today at to see where you stand. We’ll give you two credit scores updated every 14 days. We’ll also provide you with a summary of your credit report along with tips to help you get your credit on track.

You Might Also Like

is experian accurate
Experian is a credit reporting agency. It also offers consumer cr... Read More

March 7, 2023

Credit Score

A woman sits on a couch with her laptop in her lap.
Do you keep a close eye on your personal finances? Or maybe you... Read More

January 4, 2021

Credit Score

A man sits at a table with his laptop and a notebook, talking on his phone.
If you’re serious about your credit score, you need to pay your... Read More

September 29, 2020

Credit Score