How to Avoid Bad Credit if You Have Become Unemployed

Slowing economic activity strains budgets of many companies. Nobody is protected from job losses or other unexpected life-changing accidents. If you lose the source of income, you can get into a serious financial trouble. Don't make your situation worse by falling into bad credit! Otherwise you can increase your borrowing costs and make it harder to get a new job - some employers take into consideration your credit history. Keep paying all your bills on time to maintain a positive FICO score. Our tips will help you manage your finances and, hopefully, ensure your peace of mind during difficult life events.

1. One of the first things to do is to cut down your expenses as much as possible. That will help you save money for making on time payments. The basic concept is to analyze your expenses and work out your spending priorities. For example, you can quit most subscription services like Netflix, Cable TV, or fashion magazines. Switch to a lower cost mobile phone provider or use Skype. If you own your home, consider getting a roommate.

2. Use credit cards instead of cash for buying necessities. This advice may seem surprising because many experts don't recommend paying for essentials with a plastic. But when you don't have work, the situation is different. Using a credit card enables you to keep much-needed cash on hand.

Keep in mind that this tactics is just a short-term solution. When you find a new job and start to earn money, take measures to pay off your credit card debt.

3. Think about new sources of income. First of all, go to the unemployment office and apply for benefits. It will give you some money to pay the bills until you find a new job.

Don't be afraid to work double shifts at McDonalds or some other fast food place. Even by delivering pizza you can earn 9-15$ per hour. A good part about working a "service" job is that it motivates you to take care of your appearance. Moreover, many owners offer you free dinners or coffee breaks, so you can save money on food.

4. If you can't pay even the minimum due, let your credit company and other lenders know about your job loss. Ask them for a hardship program - it will enable you to make lower payments, generally for only 3-6 months.

You can also consider an assistance of a free credit counselor to evaluate your current financial situation and develop an appropriate debt management plan.

5. In order to find a new job, get your resume updated and contact employment agencies. They will assess your skills and offer you interviews with far more companies than applying to them directly. It will cost you nothing - such agencies impose fees only for employers.

You can also browse through social networks or register online at Monster.com, CareerBuilder, HotJobs and other similar websites to find a job.

6. Pay attention to your health - it's easy to get depressed when you have lost a source of income. Many people want to hole up in their apartment and don't spend any money. Don't do this. Go out (inexpensively) with your friends. This will keep your morale high.

Stop constantly thinking about your "terrible situation" - debt stress is no good for your health. Jobs come and go - it is life! If you let yourself get down, you will not have the energy to get a new better job!

Everybody hopes that he or she will never be laid off, but never say "Never." Since it is always better to be prepared in advance, try to establish a rainy day fund for about six months of living expenses and don't carry heavy balances on your plastics.

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