If you've been laid off, you probably have a million things going through your mind when it comes to your money. While the credit bureaus don't know that you've been laid off, it doesn't mean a layoff can't indirectly impact your credit score.
You might miss student loan or mortgage payments or make incomplete payments. You might run up the credit card bill just to stay afloat. These things can impact your credit score but, below, we share tips to help keep your credit in good standing if you've been laid off.
How to protect your credit after a layoff
Speak to your lenders
One of the biggest things you can do to protect your credit score after losing your job is to call up your lenders and let them know you've been laid off. They may be able to offer you a temporary forbearance period where you won't be required to make payments. Or, they may work with you to lower your minimum payment due each month.
However, they can't do anything to help you if they don't know you've been laid off. That's why it's important to speak to them sooner rather than later and iron out some arrangements.
Make the minimum payment
You might have been trying to aggressively pay down debt but while facing a layoff, scale back. Whether you received severance, unemployment benefits or are using your savings, a layoff makes your finances feel even tighter.
But you can't afford to neglect your credit. Making the minimum payment in full and on-time each month is all you need to do in order to maintain good payment history, which accounts for 35% of your credit score.
If you spoke to your lenders about your layoff, your minimum payment may now be lower than it was before, affording you a bit more financial breathing room.
Check in on your credit
Yes, checking your credit score and credit report can be stress-inducing but it's important to make sure your credit score isn't slipping.
Monitoring your credit score also helps you make sure that any provisions your lenders have provided you with are being upheld. For instance, if a lender granted you forbearance and you don't need to make payments, checking your credit report will help you make sure you aren't being penalized for not making a payment you normally would have made.
You can use credit monitoring services like Experian IdentityWorks, which has a free plan that includes FICO Score tracking, Experian credit reporting and even dark web scanning. Another strong option if you want to get some credit and identity protection for your entire family is Aura. This platform is focused on identity theft, financial fraud, scams and online theft, but it also offers credit monitoring across all three credit bureaus and instant credit lock.
Experian IdentityWorks℠
Cost
Basic: Free; Premium: $24.99 per month, Family: $34.99 per month (7-day free trial with paid plans)
Credit bureaus monitored
Basic plan monitors Experian and FICO score and scans dark web. Premium plan comes with three-bureau (Experian, Equifax and TransUnion) credit monitoring and alerts and social media reports. Family plan adds two adults and up to 10 children.
Credit scoring model used
FICO® Score 8 with all plans
Dark web scan
With all plans
Identity theft insurance
Up to $1 million with paid plans
Terms apply.
Pros
- Free version available and free trial with paid plans
- 3-bureau credit monitoring, alerts and reports
- Free FICO® Score 8
- Dark web scanning
- Up to $1 million identity theft insurance coverage
Cons
- Advanced features cost extra
- Free version is very basic
*Identity Theft Insurance underwritten by insurance company subsidiaries or affiliates of American International Group, Inc. (AIG). The description herein is a summary and intended for informational purposes only and does not include all terms, conditions and exclusions of the policies described. Please refer to the actual policies for terms, conditions, and exclusions of coverage. Coverage may not be available in all jurisdictions.
Aura
Cost
Kids: $13 per month or $10 per month billed annually; Individual: $15 per month or $12 per month billed annually; Couple: $29 per month or $22 per month billed annually; Family: $50 per month or $32 per month billed annually
Standout features
Protects against identity theft, fraud, spam calls and websites, viruses and malware. Offers three credit bureau monitoring, VPN, dark web monitoring, password manager, email aliases and instant credit lock.
Identity theft insurance
All plans include at least $1 million and white-glove fraud remediation
Terms apply.
Pros
- 14-day free trial
- Family plan includes up to 5 adults and an unlimited number of kids
- Discount if you buy an annual plan
- Up to $1 million to cover losses or expenses related to identity theft
Cons
- Doesn't monitor social media accounts
- Annual plans can only be canceled in the first 60 days for a money-back guarantee
Avoid taking on more debt
Taking on additional debt affects your credit score in many ways.
If you're laid off and find yourself relying on your credit card more to stay afloat, having a higher utilization rate can lower your credit score. The credit utilization rate is what you get when you divide the total debt by the total available credit. Keeping it under 30% is generally recommended, but sometimes when you're laid off this doesn't always become possible.
Also, applying for new lines of credit can hurt your credit score, especially if you wind up being unable to make the repayments in full.
Consider credit counseling
If it's feeling harder than expected to keep your credit above water, it's worth speaking to a credit counselor and getting personalized advice for your situation. The National Federation for Credit Counseling (NFCC) can help with credit card debt, budgeting, homeownership and other forms of credit-related counseling.
Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.
Credit Saint offers three packages for credit repair services and a 90-day money-back guarantee for services. It has received an A rating and is accredited by the Better Business Bureau.
The Credit People's Credit Report Repair service is relatively affordable compared to other programs in the space. Even the most basic package (the standard package) includes unlimited challenges to all three credit bureaus. Upgrading to the premium package includes escalated disputes and monthly credit score reports and score refreshes.
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