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Social Security: How can my credit score affect my benefits?

Your credit score does not affect your benefits in most instances but there is one case in which creditors could step in,

Tener un buen puntaje crediticio viene con varios beneficios. Te explicamos las 3 mejores formas para no perder y mantener tu puntaje de crédito.
Philippe WojazerREUTERS

Since January 1940, the Social Security Administration (SSA) has sent monthly payments to certain beneficiaries, most notably retired workers.

Receiving Social Security requires a Social Security Number (SSN), as well as meeting certain credit, earnings, and retirement age requirements. We will take a look at if changes in your credit score impact your benefits.

Can my benefits be garnished?

Although credit scores aren't a concern for Americans related to Social Security payments, having outstanding debt could have consequences.

The US government generally views federal payments as untouchable by creditors unless the debt is to the government itself. If you owe back taxes or owe money to the federal government, the federal government can step in and garnish up to 15% of your Social Security payments.

The same rule applies to federal student loan payments, while court-ordered alimony or child support payments can be garnished up to 65%. A few years back, The Wall Street Journal produced a short video explaining the impact on seniors who were having student loan debt deducted from their Social Security benefits. The number of retirees with student debt is expected to increase, considering the balance increase significantly for Gen Xers and Millennials.

Creditors do not have direct access to Social Secuirty benefits

Usually other creditors don’t have the right to take your Social Security payments, but there are some exceptions, such as any transfer of your Social Security money to a separate bank account or if you don’t spend it within two months after receipt. In these cases, the benefit may be placed within reach of creditors. We recommend that you consult an attorney for more information.

In some instances, if the SSA determines that you are unable to manage your finances, they may appoint a representative payee to receive and manage your Social Security benefits on your behalf. In this situation, the SSA may conduct a background check on the potential representative payee, which could include reviewing their credit history as part of the assessment process.