How Unemployed Can Maintain Their Credit

ElitePersonalFinance
Last Update: February 11, 2021 Credit Report

Are you unemployed? Well then, apparently, finding another job may not be your only worry. Perhaps you are not in a position to clear all your loans just like you could before; maybe you have fallen behind on either your mortgage or bills. These extra worries can take a toll on your personal credit and, worse, hamper you from getting a decent job. Before hiring you, most clients will actually have to take a look at your credit report.

But the good news is that a study conducted by the society of human resource management reveals that the percentage of employers who actually scrutinize the credit history of potential hires has significantly dropped since the year 2010. As a matter of fact, states such as Hawaii, Illinois, Maryland, and California have proscribed the practice not unless one applies for a particular managerial post requiring them to work closely with cash.

And the bad news is that possible employers will still have to check your credit history, and in case it is not in good shape, it can greatly reduce your chances of getting a job – especially when working in the financial field such as accounting. If you are residing in a state that does not have limitations on employers inspecting your credit history, you will have to be extra heedful with your finances.

Why Exactly Do Employers Have to Check Your Credit History?

Evaluating your credit report gives the employer an idea of how responsible you are and even shows whether you possess poor judgment habits regarding your individual life. The conjecture is that anyone who finds trouble managing his own finances may not project and successfully allocate budgets.

Certain employers believe that anyone having problems with credit is more likely to commit fraud or even steal. Anytime the employer pulls out a credit file, they will characteristically be singling out things like:

  • Protracted late payments.
  • Liens.
  • High credit use.
  • Hard analyses.
  • Insolvency.

However, if you have undesirable marks on your report (credit), most companies will allow you to explain any deleterious item.

Meanwhile, below is exactly what you need to do to uphold your credit when unemployed:

Set a Budget

Since you no longer getting a paycheck, it is utterly crucial that you modify your budget and begin cutting back on what you consume. In case you decide to go on with your pre-unemployment way of living, your debts will undoubtedly get out of control and become progressively difficult to settle. With the help of free sites such as Mint.com, you are offered an opportunity to create a budget and even set alerts for the much you are willing to spend in different categories, i.e., housing and entertainment.

Be Prompt in Payment and Stay Up to Date on Your Debt

This is particularly very important because on time costs account for roughly 30% of an individual’s credit score, and delayed payments are normally reported to the credit bureaus monthly.

Fix All the Faults on Your Credit Report

Getting a free copy of your credit report is very easy. All you have to do is visit AnnualCreditReport.com and burnish for errors. Get in touch with the right credit bureau if you need any assistance to improve your current credit statuses in future lenders’ eyes. You may also consider seeking credit monitoring services such as the one from Credit Sesame after doing this. This service will always keep you updated on the changes that occur on your credit report, for instance, change of address, balance change, or even any new credit inquiry. With this, you will be able to catch possible errors and notice identity theft sooner quickly.

Work Hand in Hand with Your Creditors to Make a Payment Plan in Case You are Not able to Settle Your Bills

Be preemptive with your creditors if you know you will not be in a position to settle your bills. Call and inquire from them whether you can create some payment plan so that you don’t get negative tinkles on your credit report when unable to meet the minimum payments required.

Why is a Good Credit Score Important to Unemployed?

A decent credit score can literally save individual hundreds of thousands of dollars over his or her lifetime. But what exactly does it take to be part of the ranks of the credit elite?

In credit, just like in life, it is important to set goals. The ability to know where you want to motivate you to work extra hard, be very responsible and avoid short term gratifications to establish long-lasting success and happiness.

This is particularly factual when talking of personal credit scores. Building a good one takes a lot of time and patience. And if you want to apply for an auto loan or even a credit card, then you certainly know how vital the three-digit number is to your sine qua non.

You stand a very high chances of qualifying for the best terms and interest rate a lender has to offer if only your credit score is high. If your credit score is lower, then you’ll be forced to pay more in interest on every single thing you finance. And in certain situations, you may be disqualified if your credit is too low.

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