What Happens to Your Credit Score After You’ve Been Laid Off?
When laid off, you need to be prepared and make sure that your credit score takes the minimal hit. For this, first understand the basics with the following FAQs:
FAQs on the Impact of a Credit Score After Being Laid-off
Q-1: Does getting laid-off affect your credit score directly?
Ans: No. Your credit score will not be directly affected if you are laid off. However, as your ability to pay your rent or mortgage, car payment or credit card payment will not be the same as it was with a regular income, gradually your credit score could be adversely affected. So, you have time to arrange for money before the due date in order to prevent your credit score from going down.
Q-2: Will the credit report show my employment history?
Ans: Yes, but there is a lot misreporting by the credit bureaus. One credit bureau may show your current employer while another may not have updated your record and show the employer from several years back.
Q-3: Are severance payments or unemployment checks reflected on your credit score?
Ans: No. The credit report will take into account your ability to pay for your current obligations. So, if the severance or unemployment payments allow you to pay for your current monthly or other obligations, your credit report will reflect that.
Q-4: What to do after getting laid off to maintain credit?
Ans: Before you start looking for a job, apply for unemployment benefits at your local or state government office. This office will help you improve your resume as well as interview skills. Next, contact your creditors to make an appeal for deferring or reducing payments until you find a new job.
Q-5: What other financial help can I get besides unemployment benefits when I am laid off?
Ans: Various community outreach programs and faith-based agencies such as Catholic Community Services or the LDS employment agency may consider offering you assistance. Look for any private organizations offering unemployment assistance.
Q-6: Can creditors, especially credit card providers be lenient in demanding payments while I am unemployed?
Ans: Yes. Some credit card companies and creditors can be lenient on you when you are unemployed. They may allow you to defer or reduce payments until you get a job. However, this will surely reflect negatively on your credit score.
Your credit score will certainly take a hit when regular payments don’t come, but the mere status of being unemployed will not affect it. So, the lesson for you is to do your best to make sure your credit score suffers the least.