Home » Credit Cards » Coronavirus, Unemployment, and Your Credit Score

Coronavirus, Unemployment, and Your Credit Score

Calculator and pen on a piece of paper

The last two months have been pretty unique for all of us. Actually, that is putting it mildly.  

The Coronavirus has spread to nearly 1,000,000 people around the globe and left 40,000 dead. It has also brought our nation’s economy to a screeching halt.  

Many of us have lost our jobs or had to take a salary cut. For the week ended March 21, 2020, the U.S. government reported that 3.28 million people filed for unemployment assistance, which is the highest level of seasonally adjusted initial claims in history. The previous high was 695,000 in 1982. On top of that, there are economists and state officials that believe this figure will be eclipsed in the coming weeks.

If I lose my job and file for unemployment, what does that mean for your credit score?

The short answer is that filing for or being approved for unemployment assistance does not hurt your credit score. Only data relating to your financial accounts can move your credit score. While there usually is employer data on your credit report, it does not note if you have filed for and received unemployment assistance. 

Remember that you can still be approved for a new credit card, even if you are unemployed. How? 

Well, credit card issuers focus on your finances, not your employment status. They want to know you have enough cash flow to manage your debt. It does not matter if that cash flow comes from your employment income or unemployment checks.

How can unemployment indirectly impact your credit score?

Losing a job is (almost) never a good thing. Bills pile up. So does the anxiety and stress. It is even worse when you are in credit card debt. 

Unemployment can indirectly hurt your credit score. Here are some things to avoid: 

  1. Missing your minimum payments
  2. Using more of your available credit on a total and per-card basis, therefore increasing your credit utilization rate
  3. Applying for new credit or another credit card that results in a hard inquiry

Get Your Free Credit Report

You are eligible to receive one free credit report per year if you are unemployed and plan to look for a job in the next 60 days. Take advantage of this offer. 

By examining your credit report, you will learn more about your profile and get to see exactly what lenders do. There is also a chance you could find an error somewhere in the report. Fixing a mistake on your credit report could significantly help your score. 

The Consumer Financial Protection Bureau put together a useful credit report review checklist. The checklist has a list of questions for each section of your credit report. Some of the critical questions to ask are:

  • Is your Social Security number correct?
  • Are your current and previous addresses correct?
  • If employment history is listed, is it accurate?
  • Are all of the current balances for your financial accounts correct?
  • Are accounts that you closed listed as “closed by the consumer”?
  • Is negative information reported on each credit account correct? Look for late-payments and missed payments. 
  • Are any accounts listed more than once?

To order a free report, all you need to do is visit annualcreditreport.com, or call 1-877-322-8228. If you prefer, you can also complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.