Home > Credit Score > I Just Got Laid Off: What’s That Mean for My Credit?

Comments 0 Comments

If you just lost your job, you have a lot on your mind, like updating your resume, preparing for interviews and figuring out where in your budget you can pinch pennies until you get another steady paycheck. But something else you may be thinking about, especially if you’re hoping to make a big purchase anytime soon, is the impact this loss will have on your credit score.

“While job loss does not directly impact your credit score, it’s important to keep two factors that affect your score top of mind,” Ken Chaplin, Senior Vice President for TransUnion, said. “Credit scores are impacted by on-time bill payments and the amount of credit that is used out of the credit limit. As long as you continue to make your payments on time while you look for a job, then your credit score should remain unaffected.”

Avoid Racking Up Debt

While your top priority after job loss is likely to find a new gig, you may want to put keeping on top of your bills at the top of the list as well. Gather up your bills and figure out what the essentials are and where you can cut back. If you have an emergency fund, figure out how long it can sustain you while you’re searching for a new job and how much the unemployment benefits you may be receiving can help.

If you’re overwhelmed with what you owe, it may be tempting to make all purchases with a credit card and worry about payments later, but this likely isn’t the best option.

“I recommend contacting lenders and credit card companies to see if they offer loan deferment or reduced payment plans due to unemployment,” Chaplin said. “Make sure to continue to pay the reduced fee on time and in full each month to avoid a potential credit score impact from a missed payment.”

You can also read this expert guide on how to negotiate with creditors.

Potential Employers Might Check Your Credit Report

As you’re making progress with job applications and getting interviews, you may be notified by some employers that they do credit checks as part of their application process. It’s good to be aware that your spending habits aren’t the only things appearing on these reports.

“A credit report may include employment history, although it is most likely not a detailed account,” Chaplin said.

Other things that potential employers may see from your work history depends on the timeframes for any loan applications you submitted. According to Chaplin, “if a consumer switches jobs in between credit applications, the current employer likely won’t appear on the credit report since it is usually updated using the employer information on the loan application.”

Keep an Eye on Your Credit Score

Whether it’s while you’re unemployed, or once you get a job again, it’s a good idea to see how your spending habits are impacting your credit score. To do this, you can see two of your credit scores for free, updated every 14 days, on Credit.com. You can also get your free annual credit report from AnnualCreditReport.com, which you can view online. You can also get a copy sent to you in the mail. It’s a good idea to have a printed version in case you need to dispute any errors you discover. (You can go here to learn more about disputing errors on your credit report.)

[Offer: If you need help fixing errors on your credit report, Lexington Law could help you meet your goals. Learn more about them here or call them at (844) 346-3296 for a free consultation.]

More on Credit Reports & Credit Scores:

Image: lunavandoorne

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team