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Can You Build Your Credit Score While Unemployed?

Written by
Andrew Tavin, CFEI
Andrew Tavin is a personal finance writer who covered budgeting with expertise in building credit and saving for OppU. His work has been cited by Wikipedia, Crunchbase, and Hacker News, and he is a Certified Financial Education Instructor through the National Financial Educators Council.
Read time: 5 min
Updated on July 27, 2023
Your credit doesn't have to suffer just because money is tight.

Building credit can be difficult even in the best of times. If it was easy, credit scores would be pretty useless to lenders. The whole reason credit bureaus track your credit history is to allow potential lenders to determine which borrowers are reliable -- if every borrower came across as reliable, none would be.

But there are times your credit may take a hit, or the idea of improving your credit may seem impossible, due to factors outside of your control. For example, what if you lost your job, perhaps due to a pandemic, and had trouble paying your bills? 

“If you lose your job, credit building should not be your top priority,” says Mike Cetera, senior credit analyst at Fit Small Business. “You should do the best you can to prevent credit harm instead.”

While building up your credit may not be a top priority when you’re in between jobs, there are still steps you can take to prevent it from dipping. By tracking your spending, paying bills on time, working with creditors, and taking other precautions, you can move towards a more secure financial future.

Pay those bills on time

Generally the best way to maintain or improve your credit score is by making on-time payments on loans and lines of credit from lenders that report to the major credit bureaus. However, it can be difficult to maintain your bills without a job or a reliable income source.  

If possible, continue to make payments by their due date, as payment history is the most important factor when it comes to determining your credit score. 

“Continue to pay your bills the best you can,” says Leslie H. Tayne Esq., founder and head attorney at Tayne Law Group. “Hopefully, you have an emergency fund you can draw from, even if it’s only to pay your minimums.”

Exploring your eligibility for unemployment benefits can also help to bridge that monetary gap during a job loss.

If you’re struggling with making your minimum payments, Tayne suggests reaching out to your lenders to discuss your employment status and explain your situation; you may be able to delay or pay a smaller portion of your monthly payments without penalty, especially if your unemployment situation is due to the impact of COVID-19.

Manage your spending

Keeping track of your spending is always a good habit, and doing so could mean less debt dragging down your FICO score and impacting your debt-to-income ratio. 

“Only make essential purchases,” says savings expert and TV personality Andrea Woroch. “This can help you avoid taking on debt that can lower your credit score.”

It can be especially difficult to keep your life and finances in order when you’re out of work, so you might want to consider a free budgeting app. Making and sticking to a budget is good personal finance advice at any time, but it’s especially important when you do not have a primary income stream.

Practice responsible credit card use

If you have a credit card, you can use it to make essential purchases -- but be careful about spending too much, as this can hurt your credit utilization ratio, one of the components of your credit score. Ideally you want to use no more than 30% of your credit limit and pay off your balance in full each month. Credit cards come with a grace period, so as long as you pay the balance in full you won't rack up interest.

While it might seem odd to open your first or a new credit card when you’re out of work, it can be a fine idea if you’re only using it to make purchases for essential items or services you need to pay for regardless. Just be sure you have the funds to pay the bill in full each month to avoid stress over interest rates or additional fees. If you can’t qualify for an unsecured card, a secured credit card is more easily available, but credit card issuers will require a cash deposit.

As long as you’re using your credit card properly and not carrying over a balance, making purchases with it can help to raise your score. 

Investigate balance transfers

If you already have credit card debt, Woroch recommends looking into balance transfers: 

Look for a new card that is offering 0% interest on balance transfers. Some offer this deal for up to 21 months, which will buy you more time to pay down that debt without interest.

However, this can be a risky approach to managing your debt and credit utilization ratio. Woroch warns if you have a balance on the card when the offer runs out, you may be retroactively responsible for all of the interest that would have accumulated during the offer period. That’s why she urges you to read any credit card agreement carefully before signing.

Consider a co-signer

If you are out of a job and struggling with your credit score, you probably aren’t in demand to be a co-signer for a new loan or credit card. But if you know someone else who has a good credit history and is willing to do you a solid, you could ask to sign on to one or more of their accounts.

“Another way to build credit without employment or even applying for credit is to be added as an authorized user on someone else’s account,” Tayne says. “When you are added as an authorized user on someone’s account, the account is added to your credit report.”

Of course this means your use of the account could negatively affect the creditworthiness of the original cardholder. That’s why it’s important for them to trust you and for you to ensure they do not regret that trust.  

Give your credit a boost

Even if you don’t have an account with the sort of financial institution that usually reports loan payments to the credit bureaus, there may be a way to improve your credit through your utility and cell phone bill payments you’re making through Experian Boost.

Here is what Tayne says about Experian’s “Boost” service: 

The bureau released the service to boost credit scores and help increase credit history by connecting to your bank accounts/ credit card accounts to gather your utility and phone bill payment history. If you’re out of work but still paying your utility bills, trying the service could help you build credit without being employed or using credit.

Building your credit, like building a savings account, is much more difficult when you’re out of work. While you may not leave this period of your life with a stellar credit score, taking some of these steps could pay off in the long run.

Article contributors
Contributor photo
Mike Cetera is senior credit analyst and financial editor at, and has been featured in publications like Fortune, the Huffington Post, and CNBC.
Contributor photo
Leslie H. Tayne, Esq. has about 20 years of experience in the practice area of consumer and business financial debt-related services.

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