Suppose you’re one of the millions of Americans who filed for unemployment this year due to the coronavirus pandemic. In that case, you might be wondering: “Will unemployment affect my credit score?” Unemployment can cause financial stress, but luckily you don’t need to worry about it directly impacting your credit score rating. However, there are other factors to consider during periods of unemployment. Here’s what you need to know to keep your credit in check.
As a general rule of thumb, your credit report only requires information about your financial accounts. This means your employment status, income, and balances will not affect your score. Here’s what your credit report looks at:
Even though filing for unemployment will not have a direct impact on your credit score, overspending can. Unemployment payments are typically only a percentage of your previous take-home income, so you’ll want to re-evaluate your monthly budget and cut unnecessary costs.
Using your credit card to make up for lost income can also adversely affect your credit score. If you run up a balance on your credit card, make sure you can still make the minimum monthly payments without accruing unmanageable amounts of debt.
All considered, if you recently lost your job, you should consider filing for unemployment benefits. Unemployment payments can help you stay on top of your expenses and out of debt, which will keep your credit score in good standing. You can use unemployment payments to make loan and credit card payments on-time, which is one of the most important factors for your credit score.
If you need extra financial assistance during times of transition, contact DEXSTA to discuss account options that can help you save.