Out of Work

What To Do About Credit When You're Out of Work

Losing a job is o­ne of the most disappointing and frustrating things that can happen in life.    If you've recently lost your job, your first thoughts may be, "How will I make ends meet?" Financial security and money management can be the source of much stress when you are out of work.   Dealing with creditors can be especially unnerving.    The Federal Trade Commission (FTC) publishes free brochures spelling out your rights when it comes to fair debt collection and credit reporting practices.

Fair Debt Collection

If you find that you cannot pay you're bills o­n-time, do not simply ignore your creditors.   Contact the companies you money to and explain your financial situation.    Try to work out a modified payment plan that reduces your payments to a more manageable level. Do not wait for your accounts to be turned over to a debt collector. o­nce a debt collector is involved, creditors are much less likely to work with you to offer a payment solution.   The federal Fair Debt Collection Practices Act requires debt collectors to treat you fairly by prohibiting certain methods of debt collection. To learn more, call the FTC's Consumer Response Center for a free copy of Fair Debt Collection.

Fair Credit Reporting

Paying bills late, or not paying at all, can have lasting effects o­n your credit.   Anytime payments are missed, your credit history is negatively affected.   A negative mark o­n a credit report can cause problems or delays when you go to apply for a loan, employment, or additional credit.    Creditors rely o­n the information obtained from your credit history when making judgments about granting further credit.   This is an important reason to make sure your credit report is accurate and in good standing.   For example, if your file showed that you were o­nce late in making payments, but didn't show that you are no longer delinquent, it would be inaccurate. The credit reporting agency must show that your payments now are current.

The Fair Credit Reporting Act protects you by requiring credit bureaus to furnish correct and complete information to businesses to use in evaluating your applications for credit, insurance or a job.   If there is mistake, you can work with a Credit Reporting Agency to correct the inaccuracy and clear your credit history.    For more information, request a free copy of your credit report from a Credit Reporting Agency or CRA in your area.