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Employment

Can Someone Find Out If You’re Unemployed From a Credit Report?

Unemployment can be stressful and can cause you to worry about many aspects of your life. Losing your job can have residual impacts on much of your finances, but there is one area that is not directly affected: your credit scores.

Your employment status is not shown on your credit report and doesn't impact your scores, but not having a job could indirectly impact your credit if it causes you to fall behind on your debt payments. Read on to learn more about how your employment history and credit reports work together.

Does Being on Unemployment Show Up on Your Credit Report?

While your credit reports may list past and present employer information, they do not state whether or not you are currently employed. Employer names may be listed because lenders sometimes ask for your employment information on credit applications, and they report that information to the credit bureaus (along with other identifying information). The reported employers may then be listed as part of your personal identification information. But any record of you receiving unemployment benefits will never be found listed in a credit report.

Generally, credit reports contain information from financial institutions that show your past interactions with credit. This includes records of loans you've applied for, your payment history (including late or missed payments), your current debt balances and credit limits, as well as any public records related to your finances such as bankruptcies or foreclosures.

Does Receiving Unemployment Benefits Affect Your Credit Score?

Even though the name of a past or current employer may show in your reports, employment status and history have no impact on your credit scores. The scoring algorithms used to calculate your score do not include your job history as a factor and do not look at whether you are currently employed.

Though credit reports are not directly impacted by employment, being unemployed can make it difficult to get a loan. When you apply for new credit, creditors will want to know your employment status and income to make sure you can afford to pay back the debt. They won't find this information in your credit reports, but you may be asked to self-report it on your application.

Whether you've applied for or received unemployment benefits is not a public record, is not listed anywhere in your credit reports and won't have any impact on your credit scores. The general public (including prospective employers) cannot find out if you are receiving unemployment benefits or have in the past.

Does Being Unemployed Prevent You From Applying for Credit?

Unemployment itself does not prevent you from applying for new credit. Creditors generally prefer borrowers who have a job and steady income so they can be confident any debt will be paid back, but there is no rule that unemployed people cannot apply for loans.

Creditors have a legal responsibility to verify you have the ability to repay a loan, however. For that reason they will likely ask about your employment status, and verify your sources of income and other assets. If you are unemployed, you may be declined unless you have other substantial assets or resources to repay the debt.

How to Manage Debt When Unemployed

Losing your job can be emotionally draining—especially if it happens abruptly. But unfortunately, while unemployment may put your life on hold, it doesn't place your debt on hold. With just a few exceptions—including federal student loans, which offer payment plans based on income, and measures taken during special circumstances such as the COVID-19 crisis (more on that below)—creditors will still expect you to keep making your debt payments.

Missed payments can have a lasting, yet temporary, impact on your credit score. And while the thought of paying bills when you have no income can be daunting, staying on top of your debt will help you in the long run. If you do miss payments, know that there are steps you can take in the future to get back on track rebuilding your credit.

If you're trying to navigate repayment while unemployed, here are a few tips that can help:

  • Make at least your minimum payments. Making your minimum payments will keep your accounts current and prevent any late or missed payments from showing up your credit history. Paying a bill late, or not at all, can severely damage your scores. Paying the minimum on your account might cost you more in interest over time, but it's a small price to pay to protect your scores for the long run.
  • Explore all resources available. If you're unemployed, you may be eligible for programs in addition to unemployment benefits. Beyond what you can collect from your state through unemployment, other government resources through your city, county or the federal government may be available.

    As a result of the COVID-19 pandemic, unemployment benefits have been expanded to those who otherwise would not have been eligible to receive benefits. If you've lost your job due to COVID-19 and think you may qualify, contact your state's department of labor as soon as possible to see if you're eligible to receive benefits.

  • Contact your creditors. While not all creditors will adjust your repayment plan if you lose your job, some might be willing to work with you to help you avoid getting behind on payments. Many lenders have systems in place, such as forbearance or deferment, for those facing financial hardships.

    If you've been impacted by COVID-19, there may be special resources available to help you through this difficult time. To help consumers navigate this, Experian has created a resource list of financial, non-financial and government institutions offering relief to people impacted by COVID-19.

As always, if you are worried about your credit, make sure to monitor it often so you're aware of any changes that take place. You can check out Experian's free credit monitoring service to stay on top of your reports and scores.

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