Your credit score matters when it comes to applying for loans, taking out an insurance policy, and sometimes even applying for a job. That’s why it’s so important to keep your score healthy.
You might be aware that missing bill payments can negatively affect your credit scores. But what about gambling? Does gambling affect your credit scores?
Key Points: Gambling And Your Credit Scores
- Your gambling activity is not reflected on your credit report, so your credit score shouldn’t be directly affected.
- However, gambling can indirectly affect your credit scores if it affects your finances and ability to make your bills and debt payments.
- Gambling can become addictive, so be sure to take precautions and seek help if your gambling is out of control.
Does Gambling Affect Your Credit Score?
Gambling itself does not directly impact your credit score. This is because the act itself will not be recorded on your credit report.
Instead, your credit score is based primarily on specific factors, such as the following:
Payment History
About 35% of your credit score calculation is based on your payment history. A history of making on-time bill payments will have a positive impact on your credit score. On the other hand, a slew of late or missed payments can negatively affect your credit score.
Credit Utilization
The amount you spend on credit relative to your available credit is another important component that is used to calculate your credit score. Credit utilization comprises roughly 30% of your credit score.
Generally speaking, you should not spend any more than 30% of your available credit. So, if your credit card limit is $10,000, for example, then you should not exceed $3,000 per month ($10,000 x 30%) in expenditures to keep your credit score healthy.
Length Of Credit History
The age of your credit accounts and overall credit history plays a role in the health of your credit score. A longer history of properly-managed credit accounts is a good thing for your credit score. The length of your credit history accounts for about 15% of your credit score calculations.
New Credit Inquiries
Whenever you apply for a loan or credit product, your lender will usually check your credit information, known as a “hard inquiry”. This can lower your credit score, and comprises approximately 10% of your credit score.
Public Records
Public records are noted on your credit report. These include bankruptcies, consumer proposals, liens, and accounts in collection. If you have a public record on your credit report, it will likely drag your credit score down. Public records account for roughly 10% of your credit score calculations.
How Can Gambling Indirectly Affect Your Credit Score?
While gambling doesn’t directly impact your credit score, it can influence it indirectly in the following ways:
Additional Debt
If you drain your finances because of your gambling, you may be left having to seek out loans or relying heavily on credit cards to cover your bills. Borrowing too much money can cause your debt to mount. It can also increase your credit utilization ratio, which can lower your credit score.
Loan Applications
If you apply for new credit to cover your gambling debts, the lender will pull your credit report, which is known as a hard inquiry. When this happens, your credit score will take a hit, though temporarily. Regardless, applying for new loans can negatively affect your credit score. And several applications over time can have a more pronounced effect on your score.
Missed Payments
Gambling can cause financial strain, especially if you don’t have a handle on it and use up your savings. If this happens, it could cause you to have more difficulty paying your bills on time. Late or missed payments can have a significant impact on your credit score, since payment history holds the most weight in your credit score calculations.
Bankruptcy
If your financial predicament is particularly dire as a result of your gambling, you could even face bankruptcy. When you file for bankruptcy, your credit report will reflect an R9 rating, which is the most severe rating to have that will remain on your credit report for at least 6 or 7 years. As a result, your credit score can take a severe hit.
How To Safely Gamble Without Hurting Your Credit Score
Gambling may be a fun pastime for you, but if you’re not careful, this activity can wreak havoc on your finances. As mentioned, your financial upheaval from gambling could eventually affect your credit score.
To avoid this unfortunate situation, it’s important to take certain precautions.
Avoid Using Credit
One of the most important things you can do is to avoid using credit to gain access to the funds needed to gamble. It’s very easy to pile on the credit debt to fund your activities before realizing you’ve gone too far. As such, it’s best not to use credit at all when gambling.
Determine A Spending Limit
Set a limit on how much you can afford to spend on your gambling habit without sabotaging your financial life. You should still have more than enough money left over to continue making all your other bill payments, like your rent, mortgage, and utilities. Stick to this budget to avoid overspending when gambling.
Prioritize Your Current Bills
Make sure you have enough money to pay all your bills first. Then, if there’s anything left over, you may consider using that money to gamble. This can help you continue paying your bills on time and maintain a positive payment history, which will protect your credit score.
Casino Credit: Avoiding Bad Credit
When going to a casino, there is a way to borrow money with less risk of damage to your credit rating. Casino credit isn’t like personal loans or credit cards. Casino credit is different in that the credit is not approved by credit card companies, but rather by the casino itself. This way you have a fixed amount of credit, and you don’t need to walk around with cash in your pockets.
You’ll have to provide the casino with specific personal information, and they will then provide you with a credit instrument that you use at the tables to gamble. It is like post-dating a cheque and borrowing money from yourself: it’s your money, but you can withdraw it within a certain window of time.
Being Cautious With Casino Credit
Although casino credit may be a safer route than spending on your credit card, there are still precautions that should be taken:
- Credit Check — When you apply for a casino’s credit, you give permission to the casino to check your credit. This is considered a hard inquiry and can hurt your credit scores.
- Missed Payments — Depending on how much credit you were approved for, you are given a period of time to repay the casino or cash in your markers. If you do not make your payments, casino operators may contact you and attempt to collect the debt. If that fails, they may get the courts involved or may sell your debt to a collection agency.
Gambling Debt Forgiveness In Canada
If your debt is out of control, whether it’s from gambling or something else, you may want to consider debt forgiveness if you’ve exhausted all other options. Debt forgiveness involves having your debt forgiven, either partially or entirely. This means you would not have to make any more payments to your creditors and lenders.
Debt forgiveness can help in a few ways. For starters, it would help you get rid of your debt faster and open up your finances. Secondly, debt forgiveness can help you avoid late fees and additional interest charges, which can save you money. Finally, debt forgiveness can help you pay less than what you originally owe, which saves you even more money.
However, keep in mind that while debt forgiveness may be very helpful, your credit score could suffer and affect your future ability to take on new credit.
If you do choose debt forgiveness to deal with your gambling debt, here are a few programs that fall under this umbrella:
Debt Management Plan (DMP)
A professional credit counsellor will help you come up with a DMP as a way to help you pay off your debt. Your counsellor will negotiate with your creditors on your behalf to arrange an alternative loan repayment plan that you can afford and that your creditors are satisfied with. This program works by consolidating your debt over up to 5 years into one less expensive payment.
Consumer Proposal
A consumer proposal is a type of debt forgiveness that involves making an offer to your creditors to pay a percentage of what you owe, and the rest of your debt is forgiven. Your creditors must accept your proposal for this to work. If they agree, a Licensed Insolvency Trustee (LIT) will help you arrange for an alternative payment program.
Bankruptcy
Bankruptcy is a last resort if you have gambling debt. This legal process involves surrendering certain assets to an LIT, who will sell them and use the proceeds of the sale to pay off your creditors. Bankruptcy is a last resort because of the extremely negative effect it has on your credit health.
Gambling Addiction
If you feel that your gambling activity is getting out of control, there is help available. Telephone helplines are available around the clock. Refer to the following chart to find a helpline in your area:
| Alberta Alcohol and Drug Abuse Commission Helpline | 1-866-332-2322 |
| BC Problem Gambling Information and Referral Service | 1-888-795-6111 |
| Manitoba Gambling Helpline | 1-800-463-1554 |
| New Brunswick Problem Gamblers Hotline | 1-800-461-1234 |
| Newfoundland and Labrador Helpline | 1-888-899-4357 |
| Nova Scotia Toll-Free Gambling Helpline | 1-888-347-8888 |
| Nunavut Kamatsiaqtut Helpline | 1-800-265-3333 |
| Ontario Problem Gambling Helpline | 1-888-230-3505 |
| PEI Gambling Addiction Treatment Program | 1-888-299-8399 |
| Québec – Gambling Help and Referral | -Montreal and surrounding area: 514-527-0140 -Elsewhere: 1-800-461-0140 and 1-866-767-5389 |
| Saskatchewan Problem Gambling Helpline | 1-800-306-6789 |
Mobile apps are also available to help you with your gambling, such as the RecoverMe App, which helps you manage your gambling problem from the comfort of your mobile device. The app makes use of tactics and tools such as cognitive behavioural therapy, mindfulness, and various support tools. The goal is to help you manage your urge to gamble and avoid relapsing.
Please visit The Canadian Centre on Substance Abuse website for information on gambling addiction.
Final Thoughts
If you’re gambling and consistently putting yourself further into debt, seek help right away before your financial situation worsens. Luckily, there are many avenues you can take to kick the habit and get your finances in order. And if you feel as though you might have a gambling issue, we suggest that you seek professional help right away.
