You Ask. Bev Answers: Does Losing Your Job Affect Your Credit Scores?
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In a time of great uncertainty, a voice of knowledge and reassurance can make all the difference. Beverly Anderson, President of Global Consumer Solutions at Equifax, answers your questions based on her years of experience in the consumer finance industry. You can post a question for Bev on the Equifax Facebook page. Bev regrets that she cannot answer every question individually.
Question: I was laid off during the Covid-19 pandemic, and now I'm looking to return to work. Will losing my job affect my credit reports or scores?
Simply losing your job shouldn't affect your credit reports or scores. But it is possible that your credit history could be affected if you fall behind on credit card or loan payments during the Coronavirus/Covid-19 pandemic.
If your income was impacted by the Covid-19 pandemic, and you're worried that you may not be able to keep up with debt payments, contact your lender immediately. Many are being flexible with payment plans right now, so they might allow you to pay less monthly until you get back on your feet.
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 history to get a sense of what potential employers might see, especially if 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.
For more than three decades, Beverly has built businesses and delivered significant results in the financial services and payments industries. She drove consumer and small business strategies, product strategies, and enterprise growth and profitability strategies for First USA (now JPMorgan Chase), Fleet (now Bank of America) and American Express. Before joining Equifax, she was the Executive Vice President of Cards and Retail Services at Wells Fargo where she led consumer credit cards, co-branded cards, loyalty solutions, retail finance, digital payments and enablement capabilities. She has also held leadership roles managing auto loans, personal lines and loans, servicing, loan operations, collections and fraud operations. https://www.equifax.com/about-equifax/corporate-leadership/beverly-anderson/