Does filing for (and receiving) unemployment benefits affect your credit score?
Does Unemployment Affect My Credit Score
In short, no, unemployment does not have an affect on your credit score.
With the rising unemployment rate across the country, there is no wonder why people are asking, “Does unemployment affect my credit score?”.
For the vast majority of people, their credit score is a mystery.
People tend to believe that there are complicated algorithms that take in information from all facets of their life to calculate their scores, but it’s really not that complex.
In order to shed some more light on the topic, we’ve put together this article that will: explain how unemployment affects your credit, talk about some common credit misconceptions, and educate you on how to improve your credit score.
We hope you get some value from reading this post.
Unemployment Does not report to the credit bureaus
Even though when you register for unemployment you use your social security number or individual taxpayer identification number, unemployment is not reported to the credit bureaus.
This has unfortunately become one of many credit myths that countless people believe. Remember, at the end of the day, unemployment affecting your credit is a myth. If you are unemployed and need assistance, don’t be afraid to apply for help!
Your credit score will not be affected! :)
What Are Some Other Credit Myths?
As we mentioned earlier, unemployment negatively affecting your credit score is one of MANY credit myths that may have had you scratching your head.
Here are a couple more commonly believed credit myths below:
Paying your phone and utility bills will help you build credit – This one is unfortunately false. Although it would be nice to build credit by paying your phone or utility bills, you can’t. That doesn’t mean they can’t contribute to your score though! Phone and Utility companies can actually report missed payments and accounts sent to collections to your credit.
You need to have a large loan to have a great score – This is an incredibly expensive credit myth! You don’t need to have any long-term loans at all to have a good credit score. Building a great score can be done entirely with a few credit cards.
You need to pay interest on your credit card to build credit – Again, another expensive credit myth! Paying interest on a card will not help you build your score, and neither will having a high statement balance
Having multiple credit cards will lower your score – This is a common misconception that actually might be keeping your score low. Having multiple cards is actually seen as a good thing by credit scoring companies. On top of that, it also helps decrease your credit utilization, which will increase your score! (We’ll talk more about utilization in a minute)
Closing unused older credit accounts will raise your score – Actually the opposite of this is true. The length of time that you have a credit card actually factors into your credit score in a positive way. The longer you have the card the more it helps your average length of time that you have had in your credit history. Lenders want to see longevity. Example: Say you only have two credit cards. One that you have had for 10 years but you never (or rarely) use it, and the other for 2 years that you always use. That makes your average age of your accounts 6 years. (10 + 2 = 12 divided by two credit cards). If you close your older account, your average age drops to just 2. The higher the average age the better. Here is a quote from the Experian website. “Your oldest accounts are valuable. Keep them open even if you rarely use them.”
Getting help to rebuild your credit while collecting unemployment
If you have bad credit, why not use some of your unemployment check money to sign up with Sky Blue Credit and repair your credit while looking for a job. It would be a great investment into your future for when you are ready to go back into the workforce. Sky Blue Credit offers a 90-day unconditional money-back guarantee.
How Can I Build My Credit Score Then?
Now that we’ve debunked some of the common myths on what affects your credit score and what doesn’t, let’s look at some sound advice on how to actually build your score.
Whether you are unemployed, working part-time, or working full time, it is your right, thanks to these 5 credit repair laws to dispute any misleading information on your credit reports.
You have the right to repair your own credit.
That is another commonly disputed fact where people say that credit repair is illegal.
Credit repair is not illegal.
It is your right by the law.
Repairing your credit is one way of building your credit.
And fortunately, building your score besides repairing your credit isn’t rocket science.
There are a handful of factors that go into building your score organically, but we’ll focus on the most important ones.
These are the factors that you have the most direct control of:
Have more than one credit card – Having more than one card increases your total number of accounts, which is a good thing. It also helps to decrease your utilization, by increasing your overall credit limit! Just make sure to keep your debt to credit ratio low. Here are 11 more tips on how to get a score as high as 800!
Keep credit utilization low – Your credit utilization is the ratio of all of your credit card’s statement balances to their overall credit limits. You’re going to want to keep this as low as possible, usually, less than 10% if possible. When you start getting into the higher utilization ranges, like 30% or more, your score begins to drop off precipitously!
Keep derogatory marks off your report – This is key. Derogatory marks will destroy your credit, so be sure to pay your bills on time! If you don’t have money to make the full payment, then just make the minimum. If you can’t make the minimum payment, don’t be afraid to reach out to the bank and work out a payment plan! If you have existing derogatory items, you can dispute the items on your own, or you can hire a professional credit repair company to help you to get the items removed.
Get added as an authorized user
– If you have a close friend or family member that has good credit and a couple of credit cards with high limits and low balances, ask them if they can add you as an authorized user. Being added to a card with a high limit and low balance will raise your score immediately. It is one of the quickest ways to raise your score. Learn more about piggybacking credit
Consult a credit repair specialist, if needed
– If you have derogatory marks on your credit, reaching out to a credit repair specialist may be a good idea. They can help you work with collections agencies to remove derogatory marks from your report. If you’re in need of a credit repair specialist, we’ve got a recommendation. Sky Blue Credit
. They have over 20 years of experience in the credit repair industry and they offer an ironclad 90-day money-back guarantee.
Get a free consultation
For free advice on how to deal with credit issues while on unemployment, call Sky Blue Credit today at 888-968-6257.
See if they can help you.
You will not be pushed into a sale by a pushy salesperson. You will get sound advice from a qualified credit expert with no obligation or commitment.
Sky Blue Credit
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Visit our credit repair blog for professional credit repair tips and tricks.