How to Build Credit Scores While Unemployed
Building credit scores can be difficult in these trying times. This is especially true for millions of Americans who have lost jobs or some of their income. Of course, credit bureaus follow your credit activities to help lenders and creditors determine how safe it is to provide you credit.
But during the COVID pandemic, there are circumstances out of our control. Almost everyone working in the restaurant business has been greatly affected in a bad way. Although some people have gotten other work or part-time work it often results in lower income and major stress on your credit. It may not be possible to actually build credit scores when unemployed, but you can mitigate the effects of current conditions.
Here are some ways to build credit scores or keep them higher even when unemployed:
Pay your bills on time
The number one way to either improve or keep your credit scores is to make all your loan and credit card payments on time. If you do not have a reliable source of income this may be impossible. But you should try to make the minimum payment as much as possible. Also, contact all creditors, many are following government recommendations and allowing a period of lower than minimum payments or no payments at all. Keep in mind that your interest in your debt keeps accruing (adding up) so you do not want to miss payments any more than absolutely necessary.
If you had already created an emergency fund, this is the time to use it to build credit scores.
Really monitor your spending
Monitoring your spending is a must in these times. Most people who review their spending find expenses they can reduce or eliminate without any negative effects on their life. There are numerous free services in most communities to help you start a budget and learn how to watch it closely.
Essential purchases are first
You should only be making essential purchases at this time. Things like food and rent and utilities are essential. Getting a morning coffee at Starbucks is non-essential. Track everything you spend money on no matter how small. It all adds up fast. A coffee a day is easily more than $50 a month. If you cannot build credit scores when unemployed you may be able to use your credit card for a few essential purchases.
Balance transfers could help
One trick that can work is to qualify for a credit card consolidation or a balance transfer. Some balance transfers provide a 0% interest rate for the first year (or more) and delay your first payment for 30 days from the transfer. Both of these save you money! Be sure to read the terms and conditions to be sure there are no catches in the agreement.
Building your credit is very difficult when you are not working. Your credit scores may take a hit during the pandemic, but you can relieve some of the impacts by budgeting and cutting all non-essential expenses.
How to get emergency cash while unemployed or having a poor credit score?
If you are in an emergency cash crunch, you may consider requesting a payday loan for the unemployed or bad credit payday loans because your credit scores are not a big factor in gaining approval for the short term loan. But never take out a new loan, even a small payday loan, unless you are certain you can repay when it comes due. There are cases where a payday loan will save you money, e.g., you wrote some checks, and you know you are short in your bank account. You know the bank will charge you $35 per check if they bounce. 4 bounced checks are costing you $140 dollars so the fee for the payday loan will be far less. The same often holds true for utility cutoffs.
Take as much control as you can to weather the storm. The impending vaccine will relieve the situation in the next 6 months, and we should see some return to normal life in time.
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