rebuild credit

How to Rebuild Credit After a Layoff

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Discover the Best Way to Repair Your Credit Score

More than 36 million Americans lost their jobs either temporarily or permanently during the COVID-19 pandemic. While the financial stress of unemployment can hurt your credit, a well-planned financial roadmap will help you rebuild your credit when you regain employment and manage your finances over the long term.

Your credit score is used by lenders when issuing a credit card, loan, mortgage, or other financial product to you. Repairing your credit score can be more difficult than building your credit the first time since a period of unemployment may have forced some difficult financial decisions that affected your credit score. To find out your current score, use one of the free credit score tools, such as The three major credit bureaus who provide scores through this website are offering free weekly reports through April 2021.

If you received forbearance or a deferral from a lender due to the coronavirus situation, make sure it was reported correctly. Once you know where you stand, you can begin to develop your financial roadmap and rebuild credit.

Start with the Numbers

To begin repairing your credit score, figure out what you owe and the income available to make payments. Note which debts might be past-due or delinquent so you can prioritize your payments. First, you will want to ensure your auto and mortgage or rent payments are up to date. Then, check if any credit card payments are approaching 180 days past due. After 180 days, overdue balances typically move to debt collection, which can have a long-term negative effect on your credit.

Develop a Personal Payment Plan

Now, set up a payment plan to get caught up. If high credit balances are hurting your credit score, now is the time to start paying them down. Figure out what monthly payments you can afford and pay on time every month. Your payment history is the single biggest factor affecting your credit score, so avoid having a late payment show up on your credit report.

Watch Your Credit Utilization

As you begin to pay down your debt and use your credit again, watch your credit utilization—the percentage of your credit limit used. For example, if your combined credit limit across all your credit cards is $2,000 and the balance across those cards is $500, then your credit utilization is 25 percent. Financial experts generally recommend that you keep your credit utilization rate no higher than 30 percent. A lower rate is better for your credit score.

Create a Budget

As you get on a more solid financial footing, create or update a household budget that includes all known expenses and a cushion for unknown expenses, such as an unexpected car repair. For your debt payments, plan to make the regular or minimum monthly payments. If there’s money left over in your calculations, put it toward catching up on your bills or a savings cushion.

As you start to rebuild your credit and accumulate positive credit information, you should see a corresponding positive impact on your credit score. Then, keep following your budget and financial roadmap to a stress-free financial future.


Looking for more tips on how to rebuild your credit or personal financial management? Check out more of Comenity’s financial education resources.

This page and the information contained herein is for educational purposes only. The information is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any product, service or strategy to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional. Any links to other websites are included for your convenience only. Comenity does not endorse any product or service, and is not responsible for the accuracy or reliability of the information made available through such sites.