Does Applying for Food Stamps Affect Your Credit?

In 2019, approximately 38 million people were receiving food stamps—now known as Supplemental Nutrition Assistance Program (SNAP) benefits. The USDA recently announced SNAP benefit modernization, and with the COVID-19 pandemic affecting everything from unemployment rates to housing costs, this number may be increasing. If you find yourself considering applying for food stamps, you may wonder if it will affect your credit. You can find the answer to that question and more information on recent changes to SNAP benefits below.

In This Piece

• Do food stamps affect your credit?
• What you need to know about SNAP benefits
• Helpful resources

Does Applying for Food Stamps Affect Your Credit?

No, applying for food stamps doesn’t affect your credit because it’s not something that gets reported to the credit bureaus. This means it doesn’t appear on your credit report and doesn’t affect your credit score in any way. 

However, it is possible for the events that often lead to needing food stamps to affect your credit. For example, if you’re applying for SNAP benefits because you lost your job, you may also have difficulty making your monthly payments to creditors. Late payments and high credit utilization may negatively affect your credit score, but SNAP benefits will not.

Does being on welfare affect your credit?

No. Just like the number on your paycheck doesn’t help or hurt your credit standing, receiving government aid doesn’t impact your credit scores, either. 

In short: If you live in a low-income household that’s eligible for food assistance, you shouldn’t be worried about what that means for your credit standing. In fact, if enrolling in SNAP allows you to apply your resources to paying bills and satisfying other financial obligations, it could indirectly help your credit.

What You Need to Know About SNAP

Before you apply for SNAP benefits, it’s important to understand what they are, who qualifies, and how it may or may not affect other areas of your life.

What Are SNAP Benefits?

SNAP benefits are what used to be known as food stamps. It’s a government program that provides money for food to those who qualify based on the number of people in the household and the household income. If you’re approved for SNAP benefits, you’ll receive a debit card in the mail that will be loaded with your benefit amount every month. Qualification requirements and how much you receive in benefits varies by state.

Does SNAP Check Your Bank Account?

To qualify for SNAP benefits, you have to show that you’re under the income requirements for your household size. There are also limits on how much you can have in liquid assets, which would include the amount of money in your bank account. For example, if you’re not currently working but have $100,000 in the bank, it’s possible you won’t qualify. 

Do You Have to Report SNAP Benefits to the IRS?

SNAP benefits don’t count as income for tax purposes. This means you don’t have to report them on your taxes, and receiving them won’t affect your tax bill or refund. We aren’t tax experts, however, so make sure to consult a tax professional about your individual situation.

What Are the Negatives of SNAP Benefits?

In most cases, food stamps are a positive. They provide you with the money you need to ensure your family can buy food, and this can put more money in your household budget for bills. However, food stamps aren’t accepted in all places, and not all grocery items qualify. SNAP benefits can’t be used for things such as diapers and paper towels, for example.

Upcoming Changes to SNAP Benefits 

In response to the COVID-19 pandemic, the USDA’s Thrifty Food Plan increased food stamp assistance available to those who need it. The average benefits increased more than 25% above pre-pandemic levels.

Helpful Resources

Whether you’re already receiving SNAP benefits or just starting the process of determining if you’re eligible, it’s likely there may be some other programs that could be of benefit. Here are some helpful resources to get you started:

• WIC. The Special Supplemental Nutrition Program for Women, Infants, and Children provides food assistance to pregnant and breastfeeding women and households with children under age 5. The income limits are higher for WIC than for SNAP, so if you don’t qualify for SNAP, you may still be able to receive WIC.
• LIHEAP. The Low Income Home Energy Assistance Program can help provide assistance with paying some utility bills. There may also be state and local programs through your utility provider that can help cover some of these costs.
• Medicaid. If you don’t have health insurance, you may qualify for help with medical costs through Medicaid.

If you’re having trouble paying your monthly bills and it’s affecting your credit, our free credit report card is another service that can help you learn what you need to do to protect—and rebuild—your credit. You can access your credit score so you know what’s happening with your credit, and there are resources available to help you better manage your personal finances.

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