Does Job Loss Or Receiving Unemployment Benefits Affect Your Credit Score? 

If you lost your job during the pandemic and need to apply for unemployment benefits, you might wonder if you meet the eligibility criteria and what you need to enroll. Besides that, you may also have concerns about the effects of unemployment on your credit score. 

You have enough to worry about after a layoff or job loss. You shouldn’t have to deal with the extra stress that comes with maintaining your credit standing during financial hardship. According to Business Insider, you don’t have to worry about things like filing for unemployment and job loss directly impacting your score unless you start falling behind on payments.

Why Is Your Credit Score Important?

Credit scores are three-digit figures that financial institutions, credit card companies, and other possible lenders use to assess a borrowers’ potential risk. Low credit scores are a red flag that makes it much harder to find approval and secure favorable rates for loans and credit cards. 

There are many types of credit scoring models, but most lenders use the FICO model, which ranges from 300 to 850. 670 and higher is good, while scores higher than 800 are considered excellent. 

Five things affect your credit score:


  • Payment history
  • Credit utilization
  • Credit history
  • Credit mix
  • New credit


Some factors have more weight than others, such as payment history and credit utilization, which make up a respective 35% to 30% of your credit. When you lose your job or experience a disruption to your income, paying off your balance on time and in full can be a challenge. Your score won’t fall until you start falling behind on payments and accumulate more debt to make ends meet.

Filing For Unemployment Doesn’t Appear On Your Credit Report

Your credit report contains various pieces of information that paint a picture of your financial circumstances. It includes personal details like your name and address, your entire account history, various public records associated with your accounts, and each credit check performed by a lender. Altogether, this information determines your credit score.

If you want to check your credit score, you can order it for free once a year from the three major credit bureaus: Experian, Equifax, and TransUnion. You can order it for free once a week from now until April 2021 by visiting 

According to Experian, applying for unemployment or receiving these payments is not reported to the credit agencies. Your credit profile doesn’t mention details about your employment status, though it may include previous employers if you added them on a prior credit card application.

Unemployment Can Indirectly Hurt Your Credit Score

As you can see, seeking unemployment insurance does not affect your credit score. But as mentioned early, an income disruption can have ripple effects on your rating if you fall behind on monthly payments.

Next to payment history, credit utilization is one of the most critical factors that affect your credit health. Credit utilization is the ratio of outstanding debt to your credit limit. Lenders look for borrowers with a rate under 30%. But if you want to keep a score of 800 or higher, it should be as low as possible.

If you can’t afford to pay your entire credit card bill on time, try to make the minimum payment instead of not paying anything at all. Even one missed payment can have a substantial impact on your score and may result in late penalties and other interest fees.

What To Do If You Have To Carry A Balance

If you lost your job, credit cards might be your only means to cover living expenses — particularly if you don’t have an emergency savings account. Unemployment insurance can alleviate some costs, but it may not be enough. If so, here are a few options to consider.

Find A Credit Card With Low- Or Zero- Intro APR

Either apply for a new card with a lengthy introductory period or a balance transfer card to consolidate your existing balances. If you have to use a credit card to stay afloat, it’s best to use one that doesn’t charge interest during a financially difficult time. 

Unfortunately, lenders are a lot less likely to approve your application for a new credit card if you lose your job. Not only that, many creditors are implementing stringent rules during the recession to avoid possible defaults, so this option may not be available to you.

Apply For A Personal Loan

If you can’t secure a credit card with 0% intro APR, you could consider applying for a personal loan with the benefit of flat interest rates and monthly payments. These loans often have lower interest rates than credit cards and might be easier to get. 

Bottom Line

Job loss is hard enough, and worrying about your credit score is the last thing you want to deal with. Fortunately, losing your job or applying for unemployment benefits has no direct impact on your credit rating. If you pay your bills on time and keep your credit utilization rate low, you should have no problem maintaining your credit until your situation changes.


  • Silbert, Sarah. “Losing Your Job Doesn’t Mean Your Credit Score Will Automatically Drop, but It Can Impact Your Credit If You Aren’t Able to Pay the Bills.” Business Insider, Business Insider, 6 Jan. 2021,
Ian Schindler