6 Tips to shield your credit when you do not have a job

By: on 2014-06-20
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Contrary to the public notion, unemployed people are extremely busy people. They have loads of work to do - updating their resume and submitting them in various job portals, searching for new jobs, giving interviews at various companies, etc. They have hardly time to take a look at their credit scores. However, following some tips to safeguard their credit scores can make it easier for them to restore their financial house and secure a job. Have a look at the article to get acquainted with 6 tips that may help you shield credit when you are without any job.

Tips to safeguard your credit when you are jobless

Here are the 6 tips that can help you safeguard your credit when you don't have a job:

1. Get a glimpse of your credit report:

Before rushing to the job interview or giving your recent resume to the recruiters, take a quick look at your credit report. If you don't have the copy of your recent credit report, then you can request the credit bureau to send you one. As per the laws, you have the right to get a copy of your credit report without paying a dime. However, as per the Fair Credit Reporting Act, you can get one credit report for free when you don't have a job and are searching for one.

Once you get a copy of your credit report from the credit bureaus, go through its various sections. This will help you have the distinct picture of your credit health. If the employers ask you a question regarding to your credit health, then you can offer a suitable explanation instead of sitting with a blank face.

If you find that there is a mistake in the personal information or the credit information section, then you can report it to the credit bureau. You can send a letter to the credit bureau regarding the deletion of incorrect information from your credit report. If a particular item on your credit report is creating a negative impression on the recruiters, then you can request the credit bureau to let you write a brief letter explaining the reasons to a person who wants to view your report.

2. Make payments in cash:

It seems so easy and logical to buy your groceries or clothes through credit cards when you don't have a regular source of income. You plan to pay the bills as soon as you get a job. However, you don't realize that you are exhausting your credit limits with each passing day.

Use cash when you buy something. This will help you become more financially disciplined. You can keep a tab on the amount you're spending. Another advantage of using cash is that it allows you have some funds for emergency expenses.

3. Buy payment protection insurance:

This insurance is extremely beneficial for the unemployed citizens of the country. The payment protection insurance, better known as credit protection insurance puts a hold on your payments for a specific time period for a fee. This insurance policy is primarily offered on the debts like auto loans, home loans and credit cards.

Make sure you buy the payment protection insurance prior to losing your job. This is because the insurance companies won't give you a policy when you have already lost your job.

4. Pay minimum amount:

When you are unemployed, it may be difficult for you to pay the total outstanding balances on your credit cards. If you can't pay the overall balance, then at least pay the minimum amount. Try to make the minimum monthly payments on time. Late payments will hurt your score. Keep in mind that a 30 day late payment can decrease your credit score by nearly 100 points.

5. Speak to your creditors:

If you don't have money to pay the minimum amount, then inform it to the credit card companies. Talk to your creditors and gather knowledge on the hardship programs. Find out how you can qualify for these programs.

Don't run away from your creditors. They will catch you one day. Explain your financial situation to the creditors. They can tell you about the hardship programs in details. You can't know about them without speaking to your creditors. Make sure you communicate with the creditors before it is too late. If the account is sent to a collection agency, then your credit score will drop considerably.

6. Postpone student loan debts:

You can defer student loan debts when you are unemployed. Get in touch with your lender and request for an economic hardship deferment. This will enable you defer your payments and prevent the interests from accruing when you're without any job.

You can take advantage of deferment if you have been unemployed for 1 month. The biggest benefit of deferment is that it does not make a negative impact on your credit score.

Just like the student loans, you can also defer your home loans and auto loans. Speak to your lenders about it.

Finally, stay away from the payday loan lenders especially when you are unemployed. You may feel like taking out a payday loan to meet your necessary expenses. These are short term loans. You assume that you can easily pay them back when you get a job. Wrong! These short term loans are extremely expensive. The interest rates are very high. Once you take out the loan, you'll have to pay the high interest rates months after months. It will be very difficult for you to get out of the payday loan cycle.

Last Updated on: Fri, 20 Jun 2014

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