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Maintaining Your Credit When Unemployed

Unemployment is tough. You have no steady income, and it may be hard to keep up with your bills. In today’s economy, with the high rates of unemployment, you may find it especially difficult to land a new job. And you’re probably more focused on getting yourself out of this situation than maintaining your credit.
But, before you let your credit fall by the wayside, it is important to take steps to protect your credit. Not only will this help you manage your debt and finances, it may also help you land a job. A 2010 study by the Society for Human Resource Management showed that over 60% of employers screen applicants’ credit before finalizing employment. As a result, it is important to maintain good credit habits, so employers will see that you are financially responsible and will be more likely to hire you.
Here are some simple tips to follow to maintain your credit while job searching: 
  • Stay up to date on all your bills. If you’re struggling financially, it is easy to make delinquencies, late payments, or no payments at all. Do not do this! By skipping payments, you will have increased interest charges, getting you more into debt. Plus, this will show up on your credit report. Although you may be struggling now, making a late payment will be on your credit report for 7 years. This is a long time that you’ll be stuck with bad finances, probably longer than it will take for you to get out of your employment slump and find a job. And if you can’t make the full payments, that’s fine. Paying off the minimum balance each month is better than skipping the payments altogether!
  • Check your recent statements and credit report. It is always important to examine your billing statements, but especially if you are in a financial rut. Analyze your statement for any errors or unauthorized transactions. If you do find something suspicious, call your bank immediately! It is also important to check your credit report. You can access a free credit report each year from the 3 major credit bureaus on AnnualCreditReport.com. By doing this, you’ll know where you stand, and you can check for any errors. 
  • Stick to a budget. If you don’t have a job, now is not the time to be racking up more debt! Determine what your necessary expenses are, and plan your finances accordingly. You’ll want to use your credit cards minimally to focus on paying off your expenses, not on superfluous purchases. You also don’t want to use close to your credit limit, because that will result in more debt and a lowered credit score. And you may want to look into a card that rewards you for buying the necessary purchases, like groceries and gas. Don’t be tempted to overspend; stick to your budget!
  • Communicate with your creditors. If you are having trouble making your monthly payments, call your creditors. Explain your situation to them. Emphasize that you are unemployed and in the process of finding a job. Oftentimes, creditors will agree to lower your interest rates or set up a more affordable payment plan. It never hurts to ask, especially if you are worried about your accounts going into collection. Simply communicating with your creditors can save your credit score from taking a huge hit!
Although you may be struggling with a limited income, you need good credit to get a good job and build a solid financial foundation. So, follow these practices and you won’t have to worry about being unemployed for long!
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Alice Bryant's picture

Alice Bryant is the Editor of Creditnet and a personal finance expert with over a decade of experience writing about credit cards, credit scores, debt repair, and more.

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