Highlights:
- Falling behind on credit card or loan payments affects your credit history.
- The Fair Credit Reporting Act (FCRA) prohibits potential employers from pulling your credit reports without your written consent.
- Losing your job does not impact your credit scores, but falling behind on payments will be reflected in your credit scores.
Question: I was laid off, but I intend to return to work. Will losing my job affect my credit scores and report?
Answer:
Simply losing your job shouldn't affect your credit scores and report. But it is possible that your credit history could be affected if you fall behind on credit card or loan payments.
If you're concerned that you may not be able to keep up with debt payments, contact your lenders immediately. They may be flexible with payment plans and allow you to pay less monthly until you have a new job.
It's important to check your credit reports regularly to make sure they accurately reflect any agreements you've made with your lenders. Other factors such as opening new lines of credit and paying your bills late by 30 days or more can hurt your credit scores. A free monthly VantageScore® 3.0 credit score based on Equifax data and Equifax credit report are available to you when you sign up for Equifax Core Credit™. A VantageScore is one of many types of credit scores.
Additionally, the Coronavirus Aid, Relief, and Economic Security (CARES) Act requires that lenders report that a borrower is current on their payments if that borrower was current when they sought an accommodation during the pandemic. In other words, if you and your lender agree to a modified payment plan in the wake of losing your job, that lender should not report any delinquency during the accommodation period. However, it's important to check your credit reports regularly to ensure that they accurately reflect any agreements you've made with your lenders related to the Covid-19 pandemic. Also remember that many other factors, including seeking new lines of credit and increased credit utilization, can impact your credit scores.
As you look for new job opportunities, you should know your rights when it comes to potential employers checking your credit reports. The Fair Credit Reporting Act (FCRA) prohibits employers from checking your credit history without your written consent. They can, however, sometimes factor that information into their hiring decisions. A handful of states have implemented laws to prevent your credit history from being used against you in the job hunt, but many haven't. You can review your state's employment laws here.
While credit scores are not generally used to make hiring decisions, employers can see and be influenced by your credit history, which would include closed and open lines of credit, any foreclosures, student loans and other aspects of your financial behavior. Not every employer will check your credit history, but they are more likely to do so if you are applying for jobs that involve finance or financial transactions. Under the FCRA, if you are rejected for a job because of your credit history, you have a right to know which credit reports the employer used to make that decision. Again, it's a good idea to regularly check your credit reports regularly to see what potential employers might see as you're reentering the job market.
Losing your job will not negatively impact your credit scores, but there are related factors that might, such as subsequently falling behind on your debt payments. Although the best course of action is to make your payments on time, if you're unable to keep up, contact your lender to see what accommodation options are available.
FAQs
Answer: Simply losing your job shouldn't affect your credit scores and report. But it is possible that your credit history could be affected if you fall behind on credit card or loan payments. If you're concerned that you may not be able to keep up with debt payments, contact your lenders immediately.
Does unemployment impact credit score? ›
Does unemployment affect your credit score? If you're worried that filing for unemployment benefits will affect your credit score, don't be — this income isn't reported to credit bureaus. Job loss, however, could lead to missed payments or increased credit card use, both of which can hurt your credit score.
Does employment history affect credit score? ›
Having a job doesn't increase your credit score, or directly impact your score at all. Neither does losing your job. But your employment and income can affect your ability to access credit since lenders consider this information when deciding whether to extend credit to you.
Can a job fire you for your credit score? ›
Most people know that employers can check your credit score while hiring you, but they can also do it while you work there—and let you go if the results are bad.
How do I remove employment from my credit report? ›
How to File a Dispute to Correct Information on Your Credit Report
- Review your credit report to locate the error.
- Choose a dispute method (online, phone or mail).
- File your dispute.
- Wait for the results (usually 30 to 45 days).
They focus on factors such as your payment history, your total debt, usage of available credit, length of credit history, credit mix and new credit. Credit scoring systems such as the FICO® Score☉ and VantageScore® analyze credit report information to predict whether you'll pay your debts as agreed.
Can you build credit while unemployed? ›
However, income can help you pay your bills, which contributes towards your payment history. So, you can still establish credit without a job. If you're able to make your bills on time, you'll be contributing towards your payment history—a highly weighted factor that goes into generating your credit score.
Can bad credit disqualify you from a job? ›
In the majority of states, employers can deny you employment if you have bad credit. Some states and cities have passed laws that prohibit the practice, though there are some exceptions, such as for jobs in the financial sector.
Does Equifax show employment history? ›
Employees can review their employment and income data and see a two year history of The Work Number verification requests online at any time.
Does income affect credit score? ›
How does my income affect my credit score? Your income doesn't directly impact your credit score, though how much money you make affects your ability to pay off your loans and debts, which in turn affects your credit score. "Creditworthiness" is often shown through a credit score.
Simply losing your job shouldn't affect your credit scores and report. But it is possible that your credit history could be affected if you fall behind on credit card or loan payments. If you're concerned that you may not be able to keep up with debt payments, contact your lenders immediately.
What is considered bad credit? ›
What Is a Bad Credit Score? On the FICO® Score☉ 8 scale of 300 to 850, one of the credit scores lenders most frequently use, a bad credit score is one below 670. More specifically, a score between 580 and 669 is considered fair, and one between 300 and 579 is poor.
What is a good credit score? ›
Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.
What Cannot be removed from your credit report? ›
There are other items that cannot be disputed or removed due to their systemic importance. For example, your correct legal name, current and former mailing addresses, and date of birth are usually not up for dispute and won't be removed from your credit reports.
How does Equifax know where I work? ›
The employment information on your Equifax credit report is provided by you or by your lenders and creditors. Employment information is typically reported from credit applications and is not regularly updated. This information is not used by lenders, creditors or employers in making their decisions.
What credit score will prevent you from getting a job? ›
Know Your Rights
Before diving into employment and credit laws, let's dispel a myth that's been perpetuated online. When you hear things like “a bad credit score can prevent you from getting a job,” it's actually not true. That's because employers don't pull your actual credit scores like a lender might, says Griffin.
Do credit card companies know if you are unemployed? ›
Do credit card companies know if you are unemployed? It depends. Credit card companies are usually more interested in a customer's income than employment status, but they do use employment as one means of qualifying income. However, they won't know specifically about unemployment unless a customer informs them.
How does employment status affect a credit card application? ›
Credit card issuers tend to look at applicants' employment status when determining if applicants can make payments. However, this is just one parameter they consider. It's possible to get a credit card with no job if you can show you earn income some other way or meet other qualifications.
