How to Survive Unemployment and Maintain Good Credit

Losing your job can take a serious toll on your physical, emotional and financial wellbeing, especially in an increasingly saturated job market. Nonetheless, with the right approach, you might be able to keep your head above water while maintaining good credit and proper debt management. 

Credit and debt can have huge impact on your ability to regain employment. Many employers use your credit history as a hiring factor. Therefore, if you suddenly let your credit go after losing your job, your future employer could conclude that you're unable to handle high pressure situations. Consequently, before you go letting your credit and debt balances slide, give these tips a try:

1. Get a Temporary Source of Income

While you work on getting a new job your first order of business is to find an alternative source of income. Firstly, find out if you're eligible for government assistance. If you have children, visit the nearest parish council office to find out how you might be able to access the Programme of Advancement through Health and Education (PATH).

The next move is to use your emergency fund to bridge the gap between your government assistance and redundancy money (if any). This is the reason you spent months building a solid emergency fund. Use it to help pay the bills, but use it wisely because you don't know how long you'll need it. If it's taking you longer than expected to get a full-time job, consider working part-time online or turn your hobby into a business venture. For example, pottery making, baking and so on.

2. Rein in Your Expenses

Your first move in this step is to reassess your budget. You’ll need to decrease your expenses to compensate for the decrease in your income. It is advised that you sieve through your budget with a fine tooth comb, eradicating any luxury expenses. In the beginning it might be hard to talk on your cell phone less often or go without cable television, but you'll adjust. Cutting back will stretch your emergency fund further and keep you from relying on credit cards.

3. Keep Credit and Debt Under Control

Don't make any new credit card charges. Without a reliable source of income- note that government assistance won’t last forever, so you can’t afford to make any new credit card purchases. Resist the temptation to use your credit cards to maintain the lifestyle you had prior to unemployment, or before long your credit card balances will get out of control. Instead, scale back your expenses so you don't have to use your credit card to keep up.

Don't take on new debt. The last thing you need in this situation is another bill. Though you might be tempted to take out a personal loan, now isn't the time. Put off car and home purchases until after you've been gainfully employed for a few months and you've had time to rebuild your depleted emergency fund.

Importantly, keep paying all your bills, even if it means making minimum payments. You can pick up with higher payments after you've gotten a new job. Be extra careful not to be late on any payments. Late payment fees result in unnecessary expense which makes it harder to stay on track.

Recognize when you need help. Ask your creditors and lenders for help as soon as you need it. You may be able to put some loans on deferment or forbearance, which would reduce or suspend your payments for a period of time. If you wait to contact your creditors, it could be too late for them to do anything for you.  You may also want to seek credit counselling if it gets hard to make your credit card payments.

Remember it is not an impossible feat, you can make it through a period of unemployment and maintain your credit and debt.  It just takes a little will power and proper management of ones resources because life is always better with good credit. To get started, access a copy of your credit report from CRIF NM at: http://www.crifnm.com/html/products-services/customer-service/

Retrieved from: http://goo.gl/qszKQE