How to Protect Your Credit if You Lose a Job
Your credit score is a crucial number in understanding who you are and what kind of lifestyle you should be able to afford. Your credit score is a concrete, numerical representation of how trustworthy you are as a borrower.
Your credit score is determined by calculating your payment history, debt load, and other financial details – anything from your mortgage payment to the number of credit cards in your wallet.
Losing a job can affect your financial security if you’re not prepared for it. If you lose your job for any reason, here’s how protecting yourself against future job loss could improve your financial outlook — even if it seems unlikely now.
- Review Your Budget
- Contact Creditors
- Apply for Unemployment Benefits
- Monitor Your Credit Report
- Pay Off Your Debt
- Get A Secured Or Credit Card Balance On Cards
- Stay Informed And Track Changes To Your Credit
- Don’t Be Afraid To Ask For Help
Review Your Budget
Before you dig into your savings or take on a new (and potentially risky) financial endeavor, make sure you understand where you’re at.
Reviewing your budget can help you identify areas where you are overburdening your finances and thus affecting your credit score.
If you are consistently paying more than what you should be, that is reflected in your credit report and can lower your credit score.
This is especially important for people who intend to get a new credit card or mortgage in the future.
Contact Creditors:
Most of us don’t pay attention to who we’re charging on our credit cards. If you keep paying your $1,000 balance on your Chase card, but not your $400 balance on your Capital One card, your credit score will suffer.
Make sure you are paying off your credit cards, not just balance transfer them. Contact your creditors and ask them to remove any outdated records showing you as an open account.
Apply for Unemployment Benefits
In the event that you’ve been laid off from work or your hours have been cut, you may be eligible for unemployment benefits.
This can provide you with up to a year of income, which could help protect you from financial hardship in the event that you lose your job.
When applying for unemployment, be sure to inform your employer that you have a credit report problem. The fewer accounts reporting your debt, the better.
If you have time, an old account could be removed. If not, then you can pay it off and close the account.
Monitor Your Credit Report
As a consumer, your number one job is to keep your own finances in check. If you let one creditor report negatively on your credit report, you’re opening the door for other errors to be made.
Make sure to pay your bills on time, and keep your balances as low as possible. If you find yourself consistently paying more than you should, make a plan to cut back.
Pay only the minimum amount required on all your bills. That way, when it comes time to apply for a mortgage or other large purchase, or when you make it to the end of the month, you’ll have a lower amount to show.
Pay Off Your Debt
Paying off debt is a critical step in achieving financial stability and reducing financial stress. Whether you have credit card debt, student loans, or other types of debt, making a plan to pay it off can help you regain control of your finances.
If you have any balances left from your previous jobs, now is the time to make it disappear. Don’t pay late fees or interest on your debt.
Many high interest and payment-in-full (PIF) loans have penalties that can be waived if you pay off the full amount.
Get A Secured Or Credit Card Balance On Cards
Credit card companies are notorious for reporting late or missed payments. If you are consistently late with the minimum payment, your credit score may drop.
To protect your credit score and increase your credit limit, you can get a cash-advance on a secured card.
Alternatively, you can pay off any credit card on which you have a credit line. Either way, this will improve your credit score.
Stay Informed And Track Changes To Your Credit
Staying informed and tracking changes to your credit is an essential part of maintaining good credit health.
Your credit score and credit report can have a significant impact on your ability to obtain loans, credit cards, and even employment.
Consider monitoring your credit score for free. Credit scores are constantly being updated, so make sure you are tracking any changes that might be made to your score.
There are many credit monitoring services on the market that will allow you to do this.
These services are often free and will help you stay informed and protect your credit score.
Don’t Be Afraid To Ask For Help
When it comes to personal finances, many people may feel embarrassed or ashamed to ask for help.
However, asking for help is not a sign of weakness, but rather a sign of strength and a willingness to learn and improve.
If you aren’t sure how to proceed with a credit-score-protecting move, don’t be afraid to ask for help.
There are many resources available to help you learn how to protect your credit score, and many credit counselors can assist with budgeting and debt repayment.
Conclusion
Your credit score is an important factor in mortgages, loans and car insurance rates. It’s important that you know how to protect your credit score if you lose a job.
It’s possible to improve your credit score if you make the appropriate changes. If you have poor credit, you can improve it by improving your credit score and paying off your debt. There are several things you can do to protect your credit score if you lose a job.
