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Will Less Income Or Job Loss Hurt Your Credit Score?



The Coronavirus crisis is wreaking havoc on the livelihoods of millions of people around the country and the world at large. In the United States, close to 10 million American workers—a record-breaking number—filed unemployment claims in the last two weeks of March 2020. 

Amidst the turmoil, it’s understandable that people are wondering how less income or joblessness may affect their credit. A recent Zest AI survey conducted by the Harris Poll reveals that 69% of Americans think their level of income has an impact on their credit scores. 

If you’re among those who are worried, then the facts may comfort you. Although an income reduction could certainly have an indirect effect on your credit, losing your job or bringing home less money will not, in and of itself, harm your credit score in any way. 

How Income and Employment Factor Into Your Credit Score

Credit-related questions can be complex. Quite often there are no simple answers. If you’re wondering how a specific action will impact your credit score, the answer may be an ambiguous and frustrating, “it depends.”

One reason for the ambiguity is because credit actions can impact the credit scores of different people in different ways. A new negative entry on your credit report might result in a  20 point drop in your credit score. Meanwhile, the same negative entry could cut 40 points from another person’s total score. As a result, it’s no wonder that credit myths abound. 

Yet sometimes, the answer to a credit-related question is crystal clear. Such is the case when it comes to income, employment status and your credit score. Credit scoring models do not consider this information when calculating your credit score. 

Why Scoring Models Ignore Income and Employment

Credit scoring models, like FICO and VantageScore, consider information that appears on your credit report—nothing more and nothing less. If you haven’t checked your credit reports lately from all three credit bureaus, you may be able to claim free reports from Consumers are entitled to a free credit report from each credit bureau (Equifax, TransUnion, and Experian) once every 12 months.

After you download your credit reports, look them over. You’ll notice that they don’t contain data that pertains to your income. You may find a list of current or former employers on your reports, but you won’t find your current employment status.

Because income metrics and employment statuses are absent from credit reports, credit scoring models ignore them. If an item doesn’t show up on your credit report, it’s irrelevant from a credit scoring perspective. 

Furthermore, if income was included on your credit report, it might not affect your credit score as much as you expect. The Federal Reserve released a study in 2018 revealing that income isn’t a strong predictor of credit scores. The study shows that consumers with higher incomes don’t automatically manage their credit in a way that leads to higher credit scores, nor vice versa. 

Credit scores measure the risk that a person will become 90 days or more late on a credit obligation during the next 24 months. Earning more money doesn’t automatically make you  a good credit risk. Even people with high incomes can have low credit scores if they practice poor credit management habits, like paying bills late or running up high credit utilization ratios on credit cards. 

Steps to Take If You Can’t Afford to Pay Your Bills

It’s true that an income reduction or job loss won’t directly affect your credit score. But it would be naive to pretend that suddenly earning less money doesn’t pose a threat to your credit. Reduced income can lead to trouble keeping up with your bills, especially if you already had a high debt-to-income ratio.

With FICO credit scoring models, 35% of your credit score is based on your payment history. So, if you do fall behind on financial obligations, the credit score consequences can potentially be severe. 

Are you worried you won’t be able to pay your credit obligations due to the Coronavirus crisis? Here are some tips that might help you. 

If You Need Unemployment Benefits, File for Them ASAP 

If you lose your job thanks to the COVID-19 pandemic and can’t find a replacement right away, it’s important to file for unemployment benefits ASAP. Often, it can take a few weeks for your first unemployment check to arrive from your state’s unemployment insurance program. So, the sooner you file, the better, especially with many other people applying for unemployment during this time.

On the bright side, the $2 trillion Coronavirus stimulus package, known as the CARES Act, has expanded unemployment benefits. Unemployed workers will receive an extra $600 per week from the federal government on top of regular state unemployment benefits. Additionally, the CARES Act allows self-employed workers, gig workers and freelancers to file for unemployment benefits—three groups that do not traditionally qualify. 

Create a New Budget

When your income changes, whether it’s from a reduction in hours or because you filed for unemployment benefits, you will need to make changes to your budget. If you’re bringing home less money than you were before, it’s essential to make spending cuts. 

Lowering your expenses could be a smart move even if your income hasn’t changed. You can use any funds you free up to start or grow an emergency fund that can help you better prepare for future uncertainties. 

Research New Income Opportunities and Relief Options 

One of the best ways to address an income shortfall is to find other options to inject extra cash back into your budget. Although many businesses are currently downsizing or shuttering altogether, there are a number of industries in desperate need of workers during the pandemic. Here’s a guide to help you find companies that are still hiring in the midst of COVID-19

There are also a number of relief options available, courtesy of the federal government and other organizations. For example, the federal government will soon be sending out stimulus checks to millions of Americans, courtesy of the CARES Act. Small business owners, self proprietors, and contract workers may also be able to take advantage of other provisions in the CARES Act that could help them stay financially afloat. 

Ask Your Lender for an Accommodation 

If you’re at your wits’ end and can’t find a way to keep up with all of your bills during the pandemic, your lender may be willing to help. Lenders and creditors from a variety of industries are stepping up to offer relief, such as: 

It’s best to contact the companies you do business with before you miss a payment. In the case of federal student loans and federally-backed mortgages, relief options are built into the CARES Act. However, you may still need to contact your lender to request to activate relief options, like payment deferment. With other banks, credit card issuers and lenders, you will need to reach out proactively to see what types of hardship options may be available. 

The CARES Act also includes language that temporarily amends the Fair Credit Reporting Act (FCRA). If you reach an accommodation with your lender during the pandemic, the lender must continue to report your account as current to the credit reporting agencies (assuming you weren’t already past-due on your payments). 

Other Ways Income and Employment Status Can Affect You

You probably don’t work hard to maintain a good credit score just for bragging rights. A solid credit rating matters because of the impact your credit can have on your overall financial wellbeing. 

A good credit score can make it easier to qualify for new loans and credit cards when you need them. Clean credit reports might give you an edge when you apply for a new job or promotion. Higher scores may also save you money by helping you secure lower interest rates and even insurance premium discounts. 

Of course, your credit isn’t the only factor that lenders consider. When you apply for financing, lenders will evaluate both your creditworthiness and your capacity. Creditworthiness measures the likelihood that you’ll make your payments on time. Capacity tells lenders whether you can afford the financing you’re seeking, based on your income and debt obligations. 

Even with stellar credit scores, your application might be denied if a lender doesn’t feel confident that you can afford the loan or credit card. 

Surviving the Crisis

Losing your job, even if you did nothing wrong, can be an emotional and stressful experience. Yet bad credit doesn’t have to be a side effect of unemployment or income reduction during the COVID-19 pandemic. As long as you proactively communicate with your creditors and you’re careful with the money you do have (unemployment benefits, stimulus check, emergency fund, etc.), it is possible to emerge on the other side of this storm with a good credit rating still intact. 

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Letter: Vote for Kiesha Preston | Letters



The residents of Roanoke, Virginia, need to get out of the box of voting based on party affiliation. It’s time to vote for the best candidate to do the job.

Kiesha Preston is running as an independent and is the best choice for Roanoke City Council. When she was only three years old, she was troubled because a local Kroger store removed the kiddie carts. She asked me how to get them back so she could shop beside me. I told her to go to the manager and she did. She stated her case, and a few weeks later those kiddie carts were back in the store.

Kiesha also has presented a bill to Congress that was approved. The Virginia Domestic Violence Victims Protection Act prevents domestic violence victims from not being able to rent an apartment because of bad credit as a result of their abuser ruining their credit.

These are but two examples of Kiesha’s tenacity and getting results. We need people on council who have no agenda and are truly willing to work for the least of us.

Kiesha is not intimidated by those in power and will hold her own to help those who cannot help themselves. This is why she is the right person to get the job done.

Please do not be discouraged because you are tired of the same old same old where parties are concerned. You have another choice so please vote for Kiesha Preston. She has been working tirelessly on behalf of the people without being elected to an official office. Just imagine what she can do once she is officially on City Council.

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This One Credit Card Will Get You the Most Cash Back Right Now



Let’s admit it, choosing the right credit card can be a stressful process. There are so many variables to consider—from annuals fees to credit score requirement—not to mention the various rewards and benefits each card offers, and how those align with your lifestyle and spending habits. Then there are those hidden fees and interest rates you have to reckon with. In other words, it takes a lot of work to make a truly informed decision when it comes to choosing a credit card that’s right for you. Perhaps a good cash back program is high on your credit card priority list because, well, who doesn’t like some extra money in their pocket?

To help you decide on the credit card that is going to get you the most cash back, the experts at personal finance site WalletHub compared more than 1,500 current credit card offers. From that large pool, they narrowed down the field to the cards that offer cash back rewards, comparing those offers based on initial bonuses, rewards earnings rates, annual fees, and more. From that analysis, here are the best credit cards that will get you the most cash back right now. And for more money matters, check out This Is the State Where Your Money Is Worth the Least.


Alliant Cashback Visa Signature Credit Card

Best for: Cash back on all purchases

Cash-back rate: 2.5 percent

Annual fee: $0.00 for the first year; $99.00 after that

What kind of credit you need to get one: Excellent

Learn more about the Alliant Cashback Visa Signature credit card here.

If you are worried about having buyer’s remorse after choosing a credit card, put that into perspective by checking out What You’re More Likely to Regret Than Anything Else You Do.


Discover It

Best for: People with bad credit

Cash-back rate: 1-2 percent

Annual fee: $0.00

What kind of credit you need to get one: Bad

Learn more about the Discover It credit card here.


U.S. Bank Cash+ Visa Signature Card

Best for: Cash bonus for good credit ($200.00)

Cash-back rate: 1-5 percent

Annual fee: $0.00

What kind of credit you need to get one: Good

Learn more about the U.S. Bank Cash+ Visa Signature Card here.

And to make sure you have money to pay off those monthly bills, avoid The Biggest Career Mistake You’ll Ever Make, According to Experts.


Chase Freedom Unlimited

Best for: No APR on purchases

Cash-back rate: 1.5-5 percent

Annual fee: $0.00

What kind of credit you need to get one: Good

Learn more about the Chase Freedom Unlimited credit card here.

And for more things that will help you and your family stay on the right financial track, check out The No. 1 Sign You Shouldn’t Buy That House, According to Realtors.


Capital One QuicksilverOne Cash Rewards Credit Card

Best for: People with limited-to-fair credit and looking for low annual fee

Cash-back rate: 1.5 percent

Annual fee: $39.00

What kind of credit you need to get one: Fair

Learn more about Capital One QuicksilverOne Cash Rewards Credit Card here.


Citi Double Cash Card—18 month BT offer

Best for: Flat-rate rewards

Cash-back rate: 2 percent

Annual fee: $0.00

What kind of credit you need to get one: Excellent

Learn more about the Citi Double Cash Card here.


Capital One Savor Cash Rewards Credit Card

Best for: Dining and entertainment

Cash-back rate: 1-4 percent

Annual fee: $95.00

What kind of credit you need to get one: Good

Learn more about the Capital One Savor Cash Rewards Credit Card here.


Blue Cash Preferred Card from American Express

Best for: Most cash back overall

Cash-back rate: 1-6 percent

Annual fee: $0.00 for the first year; $95.00 after that

What kind of credit you need to get one: Good

Learn more about Blue Cash Preferred Card from American Express here.

And for more helpful information delivered to your inbox, sign up for our daily newsletter.

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Possible Raises Series B and Moves Fully Remote | State



SEATLLE, Oct. 20, 2020 /PRNewswire/ — Possible raises $11 million in new equity funding to expand the team and to provide additional products for its customers. Union Square Ventures led the round, with participation from existing investors Canvas Ventures, Unlock Venture Partners, Columbia Pacific Advisors, Union Bay Partners, Tom Williams, and FJ Labs. The company has also secured $80 million in new debt financing from Park Cities Advisors.

Furthermore, the company is now fully remote and recently onboarded software engineers from across the US and the globe. Possible is committed to distributed work and actively recruiting for a number of other remote roles.

Possible provides friendly access to capital and a simple way to build credit for people who otherwise would get a payday loan or get hit with a bank overdraft fee. The company uses real-time financial data, rather than a credit score, to qualify customers and provide funds instantly through its iTunes and Android apps. Unlike payday loans or overdraft fees, Possible loans are paid back in small installments over multiple pay periods to allow customers to catch their breath. By reporting on-time payments to the credit bureaus, Possible enables its customers to build credit history and eventually qualify for cheaper, longer term financial products. On average, customers with low credit scores see their scores increase by 70 points within 4 months.

Tony Huang, Possible’s CEO explains, “So many people who live paycheck to paycheck can’t afford to build credit history. We’re helping them do it for the first time while providing them with a friendlier and more affordable small-dollar loan.”

Since launching in June 2018, Possible’s given out loans to hundreds of thousands of customers, helping meet short-term cash needs while building credit history or establishing credit for the first time. These customers, often with bad credit or no credit history, are underserved by traditional banks. Possible fills that gap and provides financial access to those who need it most while giving them the means to climb their way out.

Gillian Munson, Partner at Union Square Ventures, explains the thesis behind their new investment, “Through tech innovation, data-driven insights, and a focus on the customer, Possible is well on its way to winning the hearts and minds of both consumers and regulators alike, and building a trusted brand that endures.”

A 2019 Experian study shows 34.8% of consumers are subprime and can’t access money when they need it. They pay $106 billion in punitive fees each year to the existing financial system for short-term credit products. These consumers are trapped in predatory debt cycles of payday loans and overdraft fees without the means to rebuild their credit or improve their financial health. While there has been a number of new tech-enabled products in this space, most lead to similar debt cycles and don’t address the harder issue of improving long-term financial health. That’s where Possible comes in.

Since the company is now fully remote, Possible is actively hiring talent across the globe. Tyler, Possible’s CTO, explains, “Being fully distributed allows us to access the talent pool of the entire world. Our success so far is a reflection of the quality of our people, and we believe hiring globally will allow us to find exceptional people to join us in achieving our mission.”

About Possible

Possible is a fintech company based in Seattle, Washington. The company provides a friendlier and easier way for customers to access capital while also building credit history and improving long-term financial health.

About Union Square Ventures

Union Square Ventures is a thesis-driven venture capital firm based in New York City. USV manages over $1 billion in capital across seven funds and focuses investments in portfolio companies with the potential to transform important markets.

About Park Cities Advisors LLC

Park Cities Advisors LLC (“PCA”) is a privately held, SEC-registered alternative credit manager based in Dallas, Texas. PCA is focused on private lending across the specialty finance and FinTech sectors and provides debt capital to companies across a variety of industries through asset-based financing transactions.

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