Credit ratings are measurements compiled by financial services companies of the likelihood that an individual will be able to pay off a loan. Credit ratings are compiled using a number of factors, including the individual's previous credit history and the amount he currently owes. A felony conviction plays no part in an individual's credit rating.
Credit Scores
According to the Fair Isaac Corporation, the inventors of the modern credit score, a credit rating is compiled of five elements: payment history, amount owed, length of credit history, recent credit history and type of credit use. The score does not include any personal characteristics nor any data about an individual's life history other than those directly related to her payment of a loan.
Felonies
Although felonies do not factor into an official credit rating, there are ways such a criminal record could indirectly affect an individual's credit standing. For example, if conviction for the felony caused the person to be incarcerated, he could have lost a job and this loss of income could easily impinge on his ability to pay down debts. If the incarceration caused the individual to default on a loan, this would negatively affect her rating.
Restitution
In many cases, felons are forced to pay some form of restitution to their victims as a component of their parole or probation. Generally, if a person fails to live up to the obligations imposed on him, he is reincarcerated or otherwise sanctioned. However, if the person to whom the felon owed money chose to file a civil claim seeking payment on the debt and received a judgment in civil court, a credit rating company could count this as a failure to pay a debt, causing the company to lower the individual's rating.
Housing
People with poor credit and those with a felony conviction often face similar difficulties in finding housing. Applicants with poor credit are often turned down for housing based on the perception on the part of the landlord that they will be less likely to pay their rent on time and in full. While some states make it illegal for landlords to discriminate against applicants with felony convictions, others do not prohibit this type of discrimination.
Considerations
While a felony plays no part in a person's credit score, a lender might still consider the felony conviction when determining whether to loan money to someone. One of the criteria that lenders use when deciding whether to extend loans is a person's present income. If the lender believes a felon will face greater difficulty attaining a good job or that he might return to prison, he may refrain from the loaning the person money.
