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If you're unemployed, a credit card could potentially help cover some of your expenses until you find a new job. While it's possible to get a credit card when you're unemployed, you'll still need to meet the card issuer's income and credit requirements to get approved.
Here's what to consider if you're trying to get a credit card while unemployed.
Do You Need to Have a Job to Get a Credit Card?
It isn't necessary to be employed to get a credit card. However, the Credit CARD Act of 2009 requires card issuers to consider your ability to repay any debt you incur with the account during the application process.
In other words, not having a job won't stop you from getting approved, but not having any income might.
Fortunately, credit card issuers can consider any income to which you have reasonable access. If you're 21 or older, that includes:
- Income from a spouse or partner
- Allowances and gifts
- Trust fund distributions
- Retirement account distributions
- Social Security income
- Scholarships and grants (for students)
If you're under 21, the list is limited to personal income, allowances, scholarships and grants. If you're unemployed and receive income from any of these sources, you can include it on your credit card application.
Just note that while you're allowed to report this income, card issuers may ask you the source of your income, and some may prefer certain sources of income over others.
What to Consider Before Applying for Credit With No Income
Whether you're thinking of getting a credit card or any other type of credit while you're unemployed, it's important to consider the path forward before you pull the trigger.
The most important consideration is your ability to pay off any purchases you make. Credit card minimum monthly payments are just a small percentage of your balance—usually with a flat minimum, such as $25—which can make it easy to afford payments during your job search.
But if your budget is extremely tight, not being able to make a payment could exacerbate your financial struggles. And if you're late 30 days or more, it will damage your credit score. What's more, late payments remain on your credit report for seven years, and while their influence on your credit score decreases over time, they can still make it difficult to get approved for credit in the future.
Also keep in mind that credit cards typically charge higher interest rates than many other loan types. If you can't afford to pay off your balance in full each month, you could end up paying an annual percentage rate (APR) upwards of 20%, especially if your credit isn't in tip-top shape.
If you understand these potential dangers and still plan to get a credit card, shop around and compare options. If your credit is good or better—this typically means a FICO® Score☉ of 670 or higher—you may even be able to get a card with an introductory 0% APR promotion, which can give you time to find a job and pay off your debt interest-free.
If you're in a financial bind and need cash right away, look into a personal loan, which may charge a lower interest rate than a credit card.
Keep an Eye on Your Credit While You Search for a Job
Unemployment can wreak havoc on your financial health and make it difficult to keep up with your debt payments. As you search for your next job, check your FICO® Score regularly and watch for changes that could make it difficult to get access to credit when you need it.
Also, if necessary, ask your existing creditors about modified repayment options. Lenders are generally willing to work with people who are suffering from financial hardship because it's better than not getting any payments at all. Working with your lender can help you avoid making late payments or getting to a point where your account is sent to collections.
As you take these steps to preserve your credit history, you'll be in a better position to get back on your feet financially when you start your new job.