In today’s economy, it’s rare to find a job for life. This is especially true if you work in offline retail. Losing your job can be devastating and understandably worrying when you have bills to pay. One thing you may also worry about is its effect on your credit rating.
So, can a job loss impact your credit rating? Here, you’ll discover everything you need to know.
Will a job loss show on your credit report?
If you lose your job, it doesn’t show up on your report. So, if you have creditors, they won’t automatically discover that you’re now unemployed unless you tell them. Obviously, it’s best to tell any creditors you have the minute your circumstances change as they may be able to offer short payment breaks or reduce the amount you have to pay for a set period.
However, while your job loss won’t show on your report, or directly impact your score, it can indirectly have a negative effect.
How could unemployment impact your score?
There are numerous ways unemployment could negatively impact your credit score. Firstly, the loss of income could cause problems with your ability to repay any existing debts. If payments are missed, this is marked on your credit report and it can significantly reduce your score.
Another way your job loss could impact your score is if you need to apply for additional loans to get by. The more credit you apply for, the worse it looks on your report. Did you know that even just applying for multiple loans can negatively affect your score? So, you’ll want to limit any credit applications and ensure you can make the repayments.
Maintaining a good credit score during unemployment
If you want to ensure you maintain a good credit score while you’re unemployed, the first thing you should do is contact your creditors and utility providers. Explain your change in circumstances and see if you can benefit from a payment break.
You can also apply for a credit card from a company such as Ocean Credit Card, making sure only to use it to make small purchases, then paying off the balance each month. This will boost your score and prove you can pay back what you borrow.
Overall, a job loss doesn’t directly impact your credit score, but it can indirectly have a negative effect. So, if you want to avoid getting into serious financial trouble, make sure you follow the tips and advice above.