Does Gambling Affect Your Credit Score?

Is Gambling a Credit Score Factor?

Credit scores are based on the information included on your credit report. The factors that go into your credit score calculation include:

• Payment history
• Amounts owed and credit utilization
• Length of credit history
• Credit mix
• New credit accounts and recent hard inquiries

Because gambling gains and losses aren't reported to the major consumer credit bureaus (Experian, TransUnion and Equifax), gambling doesn't directly affect your credit scores. Income and bank balances aren't included on credit reports either, so there is nothing on your credit report that would show gambling gains or losses in any form.

Recreational gambling can be a fun hobby—but it can also be an expensive pastime that compels gamblers to spend more than they may be able to afford. The impact gambling expenses have on your personal finances is one area that could lead to indirect credit score impacts.

How Gambling Debt Could Threaten Your Credit

Even though gambling does not explicitly affect your credit score, behaviors associated with recreational gambling could result in debt that does impact your credit. These include:

• Cash advances: Cash advances from your credit card are a prime way to rack up interest. Fees on cash advances are generally equal to 3% to 5% of the advance and interest begins to accrue immediately. Fees and interest can cause cash advance charges to snowball rapidly.
• Casino line of credit: Casinos may directly grant lines of credit to gamblers. An application for a casino line of credit most likely will result in a hard inquiry on your credit file, which can drop it a few points temporarily. Past-due payments and balances associated with these credit lines are not reported back to the consumer credit bureaus.
• Payday loans: Another quick way to get cash that may be used to fund gambling or cover losses are payday loans, which are known for their sky-high fees. According to the Consumer Finance Protection Bureau, a typical payday loan comes with fees that are equivalent to nearly 400% annual percentage rate (APR). The average credit card APR is about 16%, according to the latest Federal Reserve data from November 2021.
• Missed payments: If funds get tied up in gambling payments or debts, you may find yourself missing payments for other things. Missed payments are reported to the credit bureaus and can hurt your score. If you default on an account and it is sent to collections, this information can also appear on your credit report, likely lowering your score.
• Increased credit utilization: Credit utilization shows how much of your available revolving credit you are currently using. It's an important factor in your credit score, and a high credit utilization can easily drag down your scores. It's ideal to keep your utilization as low as possible, but at least keeping it below 30% can prevent major credit score harm. If you are using credit cards and lines of credit to fund gambling and not paying off those debts quickly, your credit utilization may become high.

Resources for Getting Out of Gambling Debt

The National Council on Problem Gambling (NCPG) notes that excessive gambling is not just a financial problem but an "emotional problem that has financial consequences." Gambling addiction can be treated by professionals with the NCPG or Gamblers Anonymous.

If you're struggling with the financial ramifications of gambling, you can approach paying off your debt with the same steps as other debt resolution methods:

• Debt snowball method: With the snowball method, you build up momentum by paying off your debts starting with the smallest account and progressing until you tackle the largest.
• Debt avalanche method: Using the avalanche method, begin paying off the account with the highest interest rate first to save yourself the most over your debt repayment.
• Debt consolidation loan: A debt consolidation loan lets you consolidate several debts into one single loan payment, possibly at a lower interest rate. With this option, it's important to resist the urge to take on more debt.
• Balance transfer credit card: Balance transfer credit cards let you transfer existing balances to the new card and pay a 0% or low APR for an introductory period. This interest-free period, which typically lasts a year or longer, can help you pay off debt more quickly. Like debt consolidation loans, balance transfer cards are a good option only if you're able to avoid taking on more debt. To get the most benefit, be sure to pay off the transferred amount before the intro period ends.

Get a better understanding of your credit by requesting a free credit report available from Experian. This will show you how much you owe in one place and give you a jumping-off point for rebuilding your score a step at a time.