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Do Car Accidents Affect Credit Score?

Female driver standing beside a damaged vehicle.

Car accidents can be incredibly traumatic and stressful experiences, a problem often exacerbated by the repercussions that follow the accident itself. There are bills to pay, repairs to be made, and proceedings to determine which driver is at fault. However, often the most pressing issue is that of finances, and many people worry that their car accident will affect their credit scores. While the aftermath of an accident can be expensive, the damage to an individual’s credit score could limit their future opportunities. 

If you are interested in learning how car accidents affect credit scores, consider reaching out to schedule an appointment with an experienced New York personal injury lawyer with Stufano Law by calling (914) 752-7746.

How Car Accidents Impact Credit Scores

Car accidents themselves have no direct effect on credit scores since credit reporting agencies do not receive any information related to vehicle accidents. According to the Federal Trade Commission, credit bureaus receive information from most banks, chain stores, and loan providers. Therefore the actual event of the accident has no bearing on a credit score. 

However, the aftermath of an accident does have an impact on scores. A driver may have to pay medical expenses resulting from the crash, rent a vehicle while waiting for repairs, or provide compensation to other drivers involved in the crash. All of the purchases made or loans taken out as a result of the accident will have a direct effect on the credit score of the driver. 

Inefficient management of money, not the accident itself, is what has the potential to damage credit scores. Managing these expenses is the key to mitigating credit damage.

Car Insurance Premiums

The most prevalent expense that arises after a vehicle accident is increased insurance premiums. While the credit bureaus do not track accidents and injuries, insurance companies do. To protect their assets, they conduct risk assessments to determine the viability of insuring certain individuals. 

In the event of an accident, the risk of insuring an individual increases, which leads the insurance companies to increase their prices for that individual. The added expense this incurs can have a ripple effect.

However, this only impacts credit scores if the individual must take out loans to afford insurance. The mishandling of credit and loans is what damages scores, not the actual increased prices of insurance. With proper preparation, these negative effects can be mitigated. Additionally, making car insurance claims properly and effectively can impact the proceedings and help prevent further damage to credit scores. 

Medical Bills

Another factor that may impact credit scores is medical bills. If the bills are paid promptly without accruing debt, this may not have a significant effect. However, depending on the severity of the injuries and the coverage provided by insurance, paying such bills without debt may not be feasible. In that case, the extra financial strain shows how car accidents affect credit scores, even if indirectly. 


When medical bills are not paid, they may be sent to a collection agency to ensure the medical providers receive payment. According to the Consumer Financial Protection Bureau, collectors may be from the institution itself or a third party. In either situation, this is often reported to credit agencies as delinquent payments and can harm one’s credit score. The involvement of a collection agency has a significant negative impact on an individual’s creditworthiness. 

Missed Payments

Missed payments on medical bills or failure to pay are also reported to credit bureaus, which signals to creditors that the individual may be struggling financially. Any outstanding debt from medical bills will continue to harm credit scores until they are paid. If you are seeking advice in the event of a vehicle accident, request a consultation with a lawyer who will fight for you from Stufano Law at (914) 752-7746.

Vehicle Repair or Replacement

In the event of an accident, often the largest expense is that of repairing, replacing, or transporting without the damaged vehicle. This can be mitigated by insurance, but that often depends on the particulars of the situation. If the driver is at fault or does not have sufficient insurance, they may have to pay much of the repairs out of pocket. 

For minor accidents, repairs may be sufficient to get the vehicle back on the road. This would entail the costs of towing the vehicle, the labor of the mechanics, and potentially the expenses of new parts to replace damaged ones. Even small crashes can have ripple effects that damage other parts of the car, which can increase the cost of repairs. 

In other situations, the damage to the car may be too great to repair. The driver would then need to purchase a new vehicle, which usually involves taking out a car loan or choosing a financing option. Depending on how this loan is handled by the individual, it could impact their credit scores. 

There may also be additional costs to consider while the driver is repairing or replacing their vehicle, such as rental car fees or alternative transportation options. These additional costs can put excessive strain on the individual’s financial situation.

Debt Handling After a Car Accident

However, all of these points can be tied back to the handling of debt. None of these situations have a direct impact on credit scores, but all of them do involve the handling of debt and credit. If the individual accrues outstanding debt while paying off medical bills, managing insurance deductibles, and financing or repairing their vehicle, this will affect their credit scores negatively. 

However, these actions themselves may not have that effect. If the individual prioritizes timely payments and manages their financial obligations well, much of the damage can be mitigated. While some damage may not be avoidable, especially in extreme cases with major injuries or totaled vehicles, effectively managing payment schedules and demonstrating financial responsibility can help to safeguard one’s creditworthiness. 

Frequently Asked Questions

Some of the most commonly asked questions regarding credit scores and car accidents include the following: 

How Should One Handle Bills After a Car Accident?

Prioritization of bill payments and proper management of debt can help to prevent negative credit impact. Similar to any regular debt late payments and large outstanding balances are indicators of financial distress to creditors, which may damage credit scores.

Do Insurance Claims Affect Credit Scores?

Typically, insurance claims do not have a significant effect on credit scores. However, failure to pay insurance bills may lead the insurance company to resort to debt collection, which does affect credit scores. 

How Does One Protect Credit After a Car Accident?

To safeguard credit after an accident, one should prioritize managing expenses wisely and avoiding accruing large amounts of debt. If incurring debt is necessary in the situation, be intentional to make timely payments and monitor credit utilization to maintain a healthy credit score.

Consider Contacting a New York Personal Injury Lawyer

Insurance claims, car payments, and medical bills can all be incredible stressors after an accident. Navigating the bureaucracy of claims and bills can be challenging, and can be significantly more difficult without guidance. If you are a victim of an accident or want more information on how car accidents affect credit score, consider visiting with an experienced personal injury lawyer from Stufano Law at (914) 752-774


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