Does Applying For Unemployment Affect Your Credit Score?

If you recently became unemployed, chances are that you're thinking about filing for unemployment to help you get through rough times. So, you might be wondering, does apply for or filing for unemployment affect your credit score? This post provides you with everything you need to know about how applying for unemployment affects your credit and credit score.

Does Filing For Unemployment Affect Your Credit Score?

No, filing or applying for unemployment benefits does not affect your credit score because it does not appear on your credit report, and therefore, it does not affect your credit score. Only the name of your employer may appear on your credit report. Your employment status and income information do not appear on your credit report and therefore do not affect your credit score.

So, when you file for unemployment, rest assured that doing so does not impact your credit in any way, shape, or form. That said, your employer information may appear on your credit report only if you provided the name of your employer on a credit application. Even though the name of your employer may appear on your credit report, your employer information has no impact on your credit as it's on there for identity verification purposes only.

That said, being on unemployment can indirectly affect your credit score. For example, if you were earning a higher income while being gainfully employed, going on unemployment may reduce the amount of money you receive. This could impact your ability to make your credit card and loan payments on time.

Your payment history makes up 35% of your credit score, and to maintain a good credit score, you must make your credit card and loan payments on time. Missing even a single credit card or loan payment can cause significant damage to your credit as a late payment notation is added to your account status.

A late payment can knock down your credit score by 100 or more points. So, it's imperative that you continue to make your payments to avoid significant damage to your credit.

That said, being on unemployment may make it difficult for you to continue making timely payments on your credit. For this reason, it could affect your credit score.

Also, unemployment could cause you to use your credit card more often to cover expenses that you cannot cover without them. Using your credit card too frequently can increase your credit utilization (how much of your available credit you're using), causing your credit score to drop.

As a rule of thumb, you should keep your credit utilization below 10% and never exceed 30%. If you exceed 30% credit utilization, you could notice a significant drop in your credit score. So, this is another way that relying on unemployment could negatively impact your credit score.

Is Filing For Unemployment Listed On Your Credit Report?

No, filing for unemployment is not listed on your credit report. So, any party that reviews your credit report will not know that you're receiving unemployment unless you disclose that fact to them.

That said, if you review a copy of your credit report, you might see a section titled "employers" that lists your current and past employers. This is the only employment information that can appear on your credit report.

The employer information that appears on your credit report is gathered from information that you provided to lenders when applying for a credit card or loan.

For example, if you go to your local Mercedes Benz dealership and submit a credit application to qualify for a lease or finance a vehicle, the employer information you provide on that application is submitted to the credit bureaus. So, if you listed the name of your employer, it may be provided to the credit bureaus, causing it to appear on your credit report.

That said, other than the name of your past or current employer, no other employment information is added to your credit report.

The other information that you'll find in your credit file is your personal information, such as name, DOB, social security number, addresses, and account statuses (credit cards, loans, negative information, and records of legal events affecting your credit score).

Does Receiving Unemployment Benefits Impact Your Credit Score?

No, receiving unemployment benefits does not impact your credit score because unemployment benefits are not reported to the credit reporting bureaus. Therefore, they neither appear on your credit report nor do they impact your credit score.

So, rest assured that receiving unemployment benefits has no impact on your credit score. That said, failing to repay credit card debt or loans as a result of your unemployment can impact your credit score.

Failing to pay credit cards or loans can impact your credit because late payments are reported to the credit reporting bureaus. A single late payment on a credit card or loan can cause your credit score to drop by 100 or more points. So, to maintain a good credit score even while unemployed, you should keep making your payments in full and on time.

Also, to prevent being unemployed from lowering your credit score, you should refrain from using your credit card as accumulating a large credit card balance can significantly lower your credit score, especially if you use 30% or more of your available credit. So, keep your account balances as low as possible to maintain a good credit score.

What Factors Affect Your Credit Score?

Here are all of the factors that affect your credit score:

  1. Payment History - Your payment history makes up 35% of your credit score, so it's important to make your payments on credit cards, car loans, personal loans, student loans, and mortgage to keep your account in good standing so that that this factor positively affects your credit score. Missing even a single payment on such accounts could cause significant damage to your credit, so make sure to make all of your payments on time for the best impact on your credit score.
  2. Credit Utilization - Your credit utilization refers to how much of your available credit you're using. The lower your credit utilization, the better this factor affects your credit score. Your credit utilization makes up 30% of your credit score, so to build good credit, you must maintain a healthy credit utilization. As a rule of thumb, you should keep your credit utilization below 10% and never exceed 30%. If you use more than 30% of your available credit, you will notice a significant drop in your credit score. For example, if you have a total credit card limit of $10,000, you should keep the balances on your accounts below $1,000 (10%) and never leave a balance of $3,000 (30%) or more as this will significantly reduce your credit score. So, if you have high credit card balances and you want to improve your credit score, you should pay down the balances on your credit cards as your credit utilization accounts for a huge chunk of your credit score.
  3. Length of Credit History - The length of your credit history is the third largest factor impacting your credit score. This factors favors persons who have old accounts that are open. It looks at the average age of all of your accounts. The older your accounts, the better your credit score will be. So, if you want to improve your credit, keep old accounts open even if you rarely use to the boost the average age of your accounts.
  4. Credit Mix - Your credix mix, which refers to the diversity of open accounts on your credit report accounts for 10% of your credit scores. The more types of open accounts you have, the better this factor impacts your credit score. So, having diverse open accounts, such as credit cards, auto loans, student loans, or mortgages can boost your credit score. So, it's worth having account diversity since this provides a boost to your credit score. Credit diversity boosts your credit score because it shows lenders how you're handling repayment of different types of debts.
  5. New Credit - The number of hard inquiries and new accounts on your credit report account for 10% of your credit score. For this factor to positively impact your credit score, you shouldn't have too many hard inquiries nor too many new accounts opened within a short period of time. The less hard inquiries and new accounts you have, the better your credit score will be. Whenever you apply for a credit card or loan, a hard inquiry is placed on your credit report, slightly lowering your credit score. Although a single hard inquiry doesn't lower your credit score by much, you should avoid too many credit applications because several hard inquiries could significantly lower your credit score. So, for the best impact to your credit score, avoid submitting too many credit applications within a short period of time.

Frequently Asked Questions (FAQs)

1. Can someone who checks your credit report know that you've filed for unemployment?

No, if someone checks your credit report, they will not be able to know that you've filed for unemployment as it does not appear on your credit report. Also, unemployment information is part of the public record, so no one can tell whether you've filed for or received unemployment benefits without you disclosing that information to them.

2. Does collecting unemployment affect your credit score?

No, collecting unemployment does not affect your credit score because unemployment does not appear on your credit report. Since it doesn't appear on your credit report, it's not factored into your credit score.

3. Does employment affect your credit score?

No, unemployment does not affect your credit score because it does not appear on your credit report. Therefore, it is not factored into your credit score.

4. Does unemployment lower your credit score?

No, unemployment does not appear on your credit report, therefore, it cannot lower your credit score.


Does Your Job Affect Your Credit Score?

Whether you have a job or you're unemployed, you might be wondering, does your job affect your credit score? This post provides you with everything you need to know about how your job affects your credit score.

Does Your Job Affect Your Credit Score?

Although the name of your employer may appear on your credit report, your job does not affect your credit score. Also, whether you're employed or unemployed, your employment status does not appear on your credit report nor does it affect your credit score.

Having a job does not affect your credit score because even though your employer information may appear on your credit report, the credit scoring models do not take it into account when calculating your credit score.

For example, whether you're an award-winning surgeon or a trash collector, your job has no impact on your credit score.

So, at this point, you might be wondering, where does the employer information on your credit report come from?

The employer information that appears on your credit report was likely provided by you on a credit application for a credit card or loan.

For example, if you went to a dealership and submitted a credit application for an auto loan if you list the name of your employer on the application, the dealership might provide your employer information to the credit bureaus. If the credit bureaus receive the name of your employer, it will be added to your credit report.

That said, your employer information has no effect on your credit score because it's not indicative of how you have handled repayment of debt, so it's not factored into your credit score.

So, even though you may have lost your job, your loss of employment does not affect your credit score. In fact, the fact that you lost your job does not even appear on your credit report.

Failing to Make Credit Card and Loan Payments On Time

That said, losing your job could indirectly affect your credit score. For example, if you don't have enough money to make your credit card and loan payments on time, you could cause significant damage to your credit.

This is so because your payment history makes up 35% of your credit score. When you make your payments on time, this factor boosts your credit score. However, missing even a single payment on a credit card or loan could cause significant damage to your credit. So, try to continue making your payments on time to avoid having your loss of employment affect your credit score.

Becoming Too Reliant On Credit Cards

The second way that losing your job could affect your credit score is if you become too reliant on your credit cards.

If you end up using too much of your available credit limit, you could hurt your credit score because your credit utilization makes up 30% of your credit score. The more of your available credit you use, the lower your credit score will be.

As a rule of thumb, you should keep your credit utilization below 10% and never exceed 30%. If you use 30% or more of your available credit, you will notice a significant drop in your credit score.

So, if you've become unemployed, you should refrain from over-relying on your credit cards if you do not have a way of paying them back. This is so because you may increase your credit utilization, lowering your credit score.

Why Doesn't Your Job Affect Your Credit Score?

Your job doesn't affect your credit score because employers do not report your job to the credit reporting bureaus. In fact, there is no way for your employer to report your job to the credit reporting bureaus. The only reason your employer information may appear on your credit report is from a credit application that you submitted along with the name of your employer. Employment information and income information do not appear on your credit report. Even though your employer may appear on your credit report, it does not affect your credit score because the credit scoring models do not take into account your employer information.

What Does Affect Your Credit Score?

Now that you know that your job or lack of job has no impact on your credit score, let's discuss some of the items that do affect your credit score:

  1. Payment History - Your payment history affects your credit score. In fact, it makes up 35% of your credit score and looks at whether your making payments on your credit cards, loans, and other types of debt. If you make all of your payments on time, this factor will boost your credit score. However, if you miss payments on credit cards or loans, you could cause significant damage to your credit. Missing even a single payment can lower your credit score by 100 or more points, so make sure to make all of your payments on time so that this factor positively impacts your credit score.
  2. Credit Utilization - Your credit utilization refers to how much of your available credit you're using. Typically, the higher your credit utilization (the more of your available credit you're using), the lower your credit score will be. As a rule of thumb, you should keep your credit utilization below 10% and never exceed 30%. If you use more than 30% of your available credit, you will notice a significant drop in your credit score. So, keeping your credit utilization low is important as this factor makes up 30% of your credit score.
  3. Age of Accounts - The average age of your accounts makes up 15% of your credit score. The older your accounts, the better your credit score will be. So, if you have old accounts that are open, such as an old credit card, you should keep it open so that it continues to provide a boost for your credit score.
  4. Credit Mix - Your credit mix refers to the diversity of accounts on your credit report. It makes up 10% of your credit score. Typically, this factor rewards those who are handling different types of debts, such as credit cards, car loans, student loans, and mortgages. The more diverse your accounts, the better your credit score will be.
  5. New Credit - New open accounts and hard inquiries account for 10% of your credit score. The older your accounts and the less hard inquiries you have on your credit report, the better this factor impacts your credit score. Whenever you submit a credit application, such as a credit card application or loan application, a hard inquiry is added to your credit report, slightly lowering your credit score. Although a single hard inquiry will not lower your credit score by much, if you accumulate too many hard inquiries within a short period of time, you will significantly lower your credit score.

Frequently Asked Questions (FAQs)

1. Does being unemployed hurt your credit score?

No, being unemployed does not hurt your credit score because the fact that you're unemployed does not appear on your credit report, therefore, it has no impact on your credit score.

2. Does having a job affect your credit score?

No, having a job does not affect your credit score. That said, having a job can help you make your credit card and loan payments on time, boosting your credit score.

3. Does having a job increase your credit score?

No, having a job does not increase your credit, but if you do use your income to pay your credit cards and loans on time, you can improve your credit score. This is so because your payment history makes up 35% of your credit score, so making your payments on time can provide a nice boost to your credit score.

4. Is your employment status listed on your credit report?

No, your employment status is not listed on your credit report, therefore, it does not affect your credit.


Is Unemployment Public Record?

If you're like many Americans and you've collected unemployment due to being unemployed, you might be wondering whether collecting unemployment compensation is a public record viewable by anyone in the general public or by future employers? We will answer this question in much detail below.

Is Unemployment Public Record?

No, unemployment is not part of your public record, so no one from the general public can see whether you've filed for unemployment or received unemployment benefits. So, if you're worried that your friends, family, prospective employer, or anyone else in the public can check whether you've received unemployment, rest assured that they cannot. The only party that will be notified that you've received unemployment benefits is your previous employer because the state unemployment office is required to verify some information, such as your employment status, wages, and benefits with your last previous employer before they are able to approve your claim for unemployment.

Your last previous employer is notified because unemployment benefits are funded in part by your last past employer. Other previous employers may be notified of your claim if the unemployment office in your state decides to check additional previous employers. That said, whether even if you've collected unemployment for months, your prospective employer will not be able to obtain this information from public records, nor will they be able to obtain this information from the unemployment office.

So, now that we known your unemployment status is not public record, in what situations can your State's unemployment office disclose your unemployment status?

Your State's unemployment office may disclose your unemployment status in the following circumstances:

  • State or Federal Government Official - A state or federal government officials may request access to your unemployment records and the unemployment office may be obligated to share some information with them. Additionally, some government offices may request access to your unemployment records and the information may have to be shared with them.
  • Subpoena - If the unemployment office receives a subpoena for your unemployment records, they may be obligated to provide the requester with certain information.
  • Consent - If you provide consent to a person or organization to request access to your unemployment records, that person or entity may be granted access to your records.

Does Unemployment Show Up On Your Credit Report?

Applying for and receiving unemployment benefits will not appear on your credit report. Only your credit card accounts, home loans, car finance, student loan accounts, and personal loan accounts appear on your credit report. Furthermore, if you have collection accounts, collection agencies may add collection accounts to your credit report. Additionally, if you've filed for bankruptcy, your bankruptcy will be reported on your credit reporting, alerting lenders and creditors that you have filed for it. Things such as unemployment, your income, marital status, and checking and savings account balances do not appear on your credit report.

That said, it's important for us to reiterate that collecting unemployment benefits do not appear on your credit report and therefore do not affect your credit score.

So, at this point, you might be wondering, why are your employers showing up on your credit report if employment and unemployment records are not part of the public record? The only reason your employer may appear on your credit report is if you included the name of your employer on a credit application. The employment information you provided on your credit application may appear on your credit report when the lender reports the information to the credit reporting bureaus.

That said, you should be aware that your employer appears on your credit report does not mean that all of your employment histories will appear on your credit report. This is so because only the name you provided on your credit application will appear on your credit report. Also, you should keep in your mind that your employer's name does not affect your credit score, it's only there to serve as a record of the employer you provided on a credit application.

Will Future Employers Know That You Applied For or Received Unemployment in the Past?

If you're seeking new employment, new employers will not be able to know whether you've received unemployment benefits in the past. However, there is nothing stopping them from asking you about your employment history and whether you've received unemployment in the past. Some employers even run background checks and call your past employers to verify that you were employed in the past. So, although prospective employers will not know that you've been unemployed in the past, they may ask you about any gaps in your employment history and verify your employment history by contacting past employers.

What Information Can An Unemployment Office Disclose About You?

Unemployment offices in most states are not permitted to disclose any information about you. This is so because laws make it illegal for government agencies to disclose information about whether you've applied for and/or received unemployment benefits you've received in the past. Additionally, we should remind you that employment and unemployment records are not public records, therefore, rest assured that your information will remain undisclosed. That said, your last employer and other previous employers may be notified that you're applying for or collecting unemployment because the unemployment offices often need to verify your past employment history when determining whether you're eligible for unemployment.

What Information Can Prospective Employers Find Out About You?

Employers may run background checks themselves or use third parties to run employment background checks on prospective employees, which can often uncover which employers you've worked for in the past, as well as any gaps in your employment history. So, although you may not want to hear this, it's pretty easy for employers to figure out whether you've been continuously employed in the past. That said, rest assured that whether you've collected unemployment in the past is confidential information that no employment background check will reveal. So, if you're applying for a new job, make sure to be truthful on your employment application because it will be easy for your employer to uncover items that are not true on your application by running an employment background check.

Frequently Asked Questions (FAQs)

1. Is unemployment public information?

Unemployment benefits are not public information, meaning they will never appear on public records that can be accessed by the general public. There are some exceptions, check above to see if one of those exceptions applies to you.

2. Do unemployment benefits show up on background checks?

No, unemployment records do not show up on background checks. In fact, it is against the law for a government agency to share your unemployment records with anyone. There are some exceptions, but they do not apply to members of the general public. So, if you were worried about your neighbor or anyone else checking whether you've received unemployment, rest assured they cannot.

3. Are unemployment claims confidential?

Yes, unemployment claims are confidential.

4. Is collecting unemployment bad for your credit?

No, collecting unemployment is not bad for your credit. In fact, collecting unemployment does not even appear on your credit report, and therefore it has no impact on your credit score.