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When your finances are in disarray, your credit suffers. Government assistance programs are designed to help people get back on their feet. But what if can't qualify because you have poor credit?
Fortunately, most government assistance qualification guidelines are based on your income and assets, not on your credit score, so you don’t have to submit to a credit check in order to get help. For example, food assistance eligibility is based on household income, assets and the number of people in the household. Energy assistance programs that help keep your heat on in cold weather are usually offered at the state or local level, so requirements vary, but these too are based on how much money you have coming in — not on your credit background.
There are two main types of government assistance that do require a credit check:
This one is tricky. The Department of Housing and Urban Development doesn’t check your credit when you apply for Section 8 rental assistance, but the property owner probably will. The HUD guidelines say, “owners may reject an applicant for a poor credit history, but a lack of credit history is not sufficient grounds to reject an applicant.” So people with no credit history may have an easier time getting housing through the Section 8 program. HUD also requires that landlords treat all applicants the same. So if a Section 8 landlord does a credit check on you, he or she has to do one on every other applicant as well. If the landlord doesn’t, he or she risks being accused of discrimination.
Anyone who is thinking of lending you money wants to know whether you’re likely to pay it back, and government agencies that offer loans are no different. That means a credit check before you can get a loan. Government-backed mortgages sometimes have looser guidelines than other mortgages, but you will still have to go through a credit check. Federal Housing Administration loans are available only if your FICO score is above 580, making them much more accessible than loans from nongovernment sources. Veterans Affairs loans don’t have a minimum credit score requirement. Even so, the lenders that provide mortgages backed by the FHA and VA often have their own minimum score requirements.
If you’re not sure whether you qualify for government assistance, the best thing to do is look at the guidelines. Benefits.gov is a federal government website that outlines the types of assistance and helps you figure out where to go to get more information.
This article updated June 30, 2016. It originally published Dec. 23, 2014.