How to Make the Most of Underemployment

underemploymentIn many cases, underemployment means doing work you don’t enjoy for less than you’re worth.

Sometimes, being underemployed means only working part-time hours, even though you want to work full-time.

Underemployment can be a drag on your morale, and it is especially difficult, since you can’t usually collect unemployment benefits when you’re underemployed, so you end up struggling financially.

Here are some of the ways that you can make the most of underemployment:

1. Improve Your Marketable Skills

If you want a better job, it can make sense to improve your marketable skills. In some cases, you can get away with developing soft skills, like improving your writing and presentation skills. You can also learn about social media, online communication, and other skills that can make you valuable to many employers.

It’s also possible to take classes. If you have extra time on your hands as a result of your underemployment, you can go back to school to finish a degree or to learn something new. If you are eligible, you might be able to get student loans with relatively low interest rates in order to help you pay for school. While student loans aren’t an ideal option, they can help ease your financial situation and help you acquire a marketable skill that an employer might be willing to compensate you for.

2. Start a Side Gig

If you have always wanted to start a side business, now might be your chance. If you have time due to underemployment, you might be able to turn your hobby into a money-maker. See if you can find a good business idea and start your side gig.

Not only can a side business help you fill the time, but it can also reduce the financial difficulties that come with underemployment. If you are fortunate, and if you work particularly hard to make it happen, you might actually end up making enough with your side business to eliminate the need for a more conventional job. Your time underemployed might actually contribute to a better lifestyle later.

3. Re-Evaluate Your Spending

It’s important to use this time to reevaluate your spending. While underemployment is not a fun situation to be in, the reality is that it can force you to take a closer look at your spending and your financial priorities.

Where are you spending money? Where can you cut back? Does it make sense to downsize a little? Should you sell some of your belongings? You might also discover that it makes sense to spend more time with your friends and family making memories with inexpensive activities. While it’s not a good place to be, I do know people who have been underemployed who used it as a reason to completely overhaul their lifestyles. In some cases, it actually resulted in increased lifestyle satisfaction.

No matter your situation, you can turn underemployment into an advantage. Even if you don’t want to adopt minimalist principles to downsize in response to underemployment, you can still change your situation. Whether you look to become marketable by acquiring new skills, or whether you start a side gig, you can use underemployment as a way to propel you into the next stage of your life.

Are you underemployed? What are you doing with your free time? Leave a comment!


Seven Steps to Investing in Yourself

Many of us spend the majority of our lives investing in other people’s projects and dreams.  We work long and hard each day to achieve the goals of our employers. We pay 15–45% of our income in taxes to pay for the plans and efforts of our country, state, and county. We invest our money in small and large corporations for a return so they can use it to earn multiple times that return. We’re using a lot of our time and money to further the cause of things bigger than us.  If you’d like to make an investment in yourself for a change, here are some tips you can use to get started.

Realize what an under priced asset you are: You’re the engine of everything – your earning power, your contact with people, your ability to take advantage of opportunities and to avoid mistakes along the way. Once you truly focus on your chances of success in a chosen field, activity or creative endeavor, the steps to getting there become clearer.

Start gathering advice: When you identify your goals, don’t be shy about asking people in those specific fields and interests what it’s like to be there. Ask them what they did to zero in on doing what they enjoy – and only what they enjoy. Read everything you can, and talk with all the experts you can find that will get you closer to the feeling of what it’s really like to make that leap.

Tuition might be expensive, but ignorance is a lifetime liability: If it’s a class or two or an entire degree program, don’t automatically dismiss the ridiculously high cost of education to reach a goal. There are always ways to afford instruction – see what benefits your employer offers, check to see whether specific grant or scholarship programs may apply to your financial situation. Be entrepreneurial in your efforts to afford learning.

Make two asset lists: Try this. Write on one sheet of paper (or type if it’s easier) all of your financial assets. On the second, write down all your personal assets – your ability to communicate with people in a variety of ways; your individual knowledge or skills in key areas of interest to you; the people networks you maintain that could potentially benefit you if you maximized those contacts in certain ways. Even blend your appearance into the mix. What would happen if you invested in various aspects on this second list? Could you derive more happiness in your life? More earnings? More fun? What could that investment become worth to you?

Review your career map: Maybe it’s just a matter of looking closely at an updated resume, but try and focus on what you’ve done in your life that was really fun or engaging. Maybe it wasn’t a dream job you had for years, but a fleeting experience or chapter within a career that surprised you in how happy it made you. How do you create that experience of enjoyment, and what investment of time and money will it take to get there?

Consider outsourcing: Most of us have a very effective excuse at the ready when people ask us why we’re not spending more time doing what we’re good at – “I don’t have time to focus on that.” What would it take to get that time? Would it involve hiring someone in to take care of household chores or bringing in a competent sitter for your kids more than once a week to allow you to launch a business or take a job you’d really like to tackle? If you’re already in business and swamped, check your support system – if you have one. From answering the phone to bookkeeping, there’s always a way to offset time-killing jobs so you can focus on higher-earning, higher-enjoyment ones.

Confer with your family: Single people can operate independently, but families owe it to each other to discuss goals and how they’ll get there. Achieving a career or personal goal shouldn’t be any different since it will likely affect a family’s financial or time opportunities to do certain things. It’s tough, for example, for new entrepreneurs to get time to do family vacations. There may be favorable solutions to this problem, and it may be other members of your family who help you achieve them. Be open, and make sure everyone understands your dreams.


How to Stay Motivated While Looking for Jobs

MotivationIt’s not fun being unemployed or underemployed. In fact, there are a number of studies that indicate that being unemployed can be bad for health, and long-term unemployment and underemployment can be more damaging to your overall mental health and wellness than many other negative life events.

One of the issues is that it can be difficult to stay motivated as you look for a new job. It’s hard to focus when you don’t have a purpose for your day, and many people take a self-esteem hit when they’ve been unemployed for long periods of time. After awhile, motivation disappears, and it’s harder and harder to move forward.

If you are looking for a job, it makes sense to try and stay motivated throughout the process – even if it’s difficult. Here are some ideas for staying motivated while you look for jobs:

1. Take Care of Your Health

First of all, it’s important to take care of your health. It can be easy to slip into poor health habits related to sleep, exercise, nutrition, and other items. Make it a point to eat healthy, get the right amount of sleep, and engage in physical activity. Try to avoid falling back on excessive drinking, smoking, and junk food.

Taking care of your health is one of the most important things you can do if you want to maintain a healthy outlook and improve your mental attitude.

2. Create a Schedule

Put together a schedule that you can stick with while you are looking for jobs. Keep it similar to what you would have if you were working at a job. Your schedule should include looking for jobs, preparing your resume and cover letter, possibly doing temp work when you can, and taking care of other tasks that might help you find a job.

If you know you have a schedule, it will give you a reason to keep moving, and help you remain motivated.

3. Fulfill a Purpose

It’s especially important that you feel as though you have a reason to get up in the morning. As the weeks and months slip by with unemployment and underemployment, and you have a hard time finding a new job, this can get harder. Tailoring your resume for yet another job, and another meeting with your case manager down at workforce services probably isn’t enough purpose.

You could also work on a hobby, or a side business. Unemployment is a good time to explore the possibility of starting a business or monetizing a hobby.

So, when you’re making your schedule, look for ways to add something else to your day. Volunteer somewhere. See if you can get an internship. Sign up for a temp agency so that you have something to do. Find out what it takes to be a substitute teacher (in some states all you need is two years of college). When you’re involved in a purpose, it can help you stay motivated, and keep you from slipping into despair.

4. Get Dressed and Get Out of the House

Sometimes you just need to get dressed and get out of the house. Don’t stay at home all day, surfing the Internet, reading, and applying for jobs. Have a lunch meeting with a friend. If you can, attend a conference or seminar. Take a walk. Having a purpose can be a great way to encourage you to get out of the house.

Combine these efforts, and you will be more likely to remain motivated. While you’ll still probably have disappointing, down days, you will also be better able to recover from those days and move forward.

Are you unemployed and not feeling very motivated? Which of these actions can you commit to in order to get motivated? Leave a comment!


What You Shouldn’t Do After a Layoff

layoff noticeYou’ve cleaned out your office and moved everything back home. There’s some severance pay coming and unemployment should start before too long. Now you have all the time in the world. What you do with that time – and what you avoid doing with it – will make all the difference in how quickly you find a new job.

Naturally, you should give priority to looking for a new job. That’s pretty obvious. But there are also some very destructive things you shouldn’t be doing. Unless you consciously resist them, you’ll fall into doing them by default.

What are activities you should avoid?

1. Watching television.

Don’t settle down in front of the TV to watch the news channels. It’s okay to check in from time to time, but newscasts are packed with negative information. You don’t need that right now. Modern journalism depends on crime, crisis, catastrophe, and crying. Seeing all that bad news adds to the emotional baggage you’re already lugging around. Right now everything needs to be focused on uplifting and encouraging yourself. The news won’t give you that.

Temporarily block the movie channels. Paying for pay-per-view isn’t in the budget now. Besides, should you tune in, it could turn into an investment of at least an hour and half, and that’s 90 minutes that should be spent job hunting or networking.

TV is dead time, and that’s not where you need to be investing your time. You don’t need to be entertained – you need to develop a workable action plan. Time spent watching TV is a drain on productive time, so keep it to a minimum.

2. Spending time with negative people.

The last thing you need to be doing right now is commiserating with negative people. You’re probably already in a delicate emotional state, and negative people have the potential to finish you off.

Anything pessimistic will slow down your job hunt. Getting back in the workforce has to be your goal. Listening to counter-productive conversation might keep you camped out on the misery of your job loss, and you don’t need that right now.

3. Ruminating.

Whenever something bad happens, ruminating over it is natural behavior. While some of that will happen automatically, you have to be intentional about keeping it to a minimum. Whatever happened that led up to your job loss is now history. Learn from it, do your best to not repeat any mistakes you made, but by all means, let it go. Rehashing the episode won’t change the outcome, and only causes you to focus on the negative.

A job loss is a time for action, and that has to be your focus. Ruminating can easily be mistaken for action, but it’s nothing of the sort. Only action is action. Keeping yourself busy will be a priority. When you are out and about, there’s a chance that you can make good things happen. When you ruminate, all you’re doing is stewing in your own juices. Make a plan of daily activities and stick to it, even if you don’t feel like it. Action puts us in control, ruminating turns us into self-styled victims.

4. Borrowing money.

Making ends meet with a reduced income is a challenge, one to be faced with resolve and consistency. Cutting expenses is the answer, not trying to get more temporary income. Taking out a loan – or worse yet, hitting up friends and family – won’t make the problem go away. The debt will have to be repaid at some point. Having it hang over your head while you get started on a new job adds pressure you don’t need. Worse, if your time out of work ends up being longer than you anticipate, the loans will begin to weigh heavily on you, adding more problems.

5. Applying for jobs you’re not qualified for.

There’s a theory that when you’re unemployed you should use the “shotgun” method of applying for work. That involves applying for any job that’s available under the assumption that sooner or later someone has to hire you.

It sounds logical, but don’t do it. Here’s why:

  • Applications for jobs you aren’t qualified for will only result in more rejections; protecting your ego is important in a job hunt – a growing pile of rejection letters isn’t a positive development.
  • Ultimately, there are only so many potential employers for your skills in your location; you don’t want to hurt a legitimate job opportunity with an employer by applying for positions you aren’t qualified for.
  • Time and effort expended on frivolous applications will take time away from a more focused job search.
  • Applying for a lot of positions might feel good when you’re doing it, but it only builds false hope – that will lead to a big letdown when reality hits.

You don’t want to get caught up spinning your wheels in the mud. Concentrate your efforts on the most likely positions and ignore the rest.

6. Feel you’re worthless or that you’ll never find another job.

This is a form of fatalism, and you don’t need to be engaging in it. Bad things happen in life, and part of our success is learning how to deal with it. No matter how bad your situation may seem right now, you’re not good-for-nothing. You are an individual who has hit a rough spot in the road. The layoff may be because of a lack of work, management’s bad decisions, or you may indeed have under-performed. But you are still a person valuable to many. There are things you can do no one else in the world can do. Be proud of your personal identity, and most of all, be ready to promote it.

It is extremely rare for a job-seeker making reasonable efforts to not find work – sooner or later. But you have to keep working at it.

So be ready to clear the decks in your life, and to focus completely on the job at hand – finding a new job.

What activities do you find to be unproductive after you’ve been laid off from your job? Leave a comment!


How Peer-to-Peer Sites Can Help You Borrow Money

borrow moneyOne of the most difficult situations you can find yourself in is when have lost your job, or your hours are dramatically cut. In some cases, you might be looking for a way to extend your emergency fund, or get a little help as you look for a new job.

Peer-to-peer (P2P) lending sites can help you borrow money to get back on your feet, and can also be a convenient way to get help from family and friends.

Peer-to-Peer Lending

The idea behind peer-to-peer lending is that you can get help from people who are more or less like you. It’s possible for you to borrow from those who are willing to fund you in increments as low as $25. Sites like Lending Club and Prosper allow you to get others involved with your efforts, and do so in an “official” way.

One of the biggest pitfalls of borrowing from friends and family is that things can get personal. How do you charge interest? What’s the payment plan? Will you really repay the loan? Or is it supposed to be a gift? Using peer-to-peer lending sites can help you clarify these issues.

With a P2P lending site, someone else takes care of all of those details. You can figure out how much you need, and then invite friends and family to help fund your loan. As a bonus, you might also get help from strangers. You can specify that you are looking for money to help you find a new job, which might include the costs of career coaching, resume development, and perhaps a course or degree you need to take things to the next level.

It’s important to realize, though, that this formalized arrangement means that you have to repay the loan as agreed, or your credit rating could suffer. If you aren’t sure when you’ll be able to start making payments, it can make sense to go through a more informal process with friends and family, or ask for gifts.

Borrowing from Friends and Family without P2P Lending

If you are going to borrow, even if you don’t go through a P2P lending site, it can still make sense to make the situation as businesslike as possible. There are plenty of templates that can help you put together an agreement with friends and family to repay a loan. And, thanks to payment options like PopMoney and PayPal, it’s fairly easy to make payments if that’s what you decide to do.

However, you do need to be aware of the risk you are taking with your relationship. If you don’t repay the loan, it can lead to hard feelings. You might risk a friendship or strain a family relationship if you borrow money. Take that into consideration before you decide to borrow from friends and family, whether you use P2P lending or some other method.

In fact, P2P lending online can be preferable, since it gives you the chance to borrow without getting your friends and family involved.

Another option is to be upfront about your need for gifts. Sites like Betterment and GoFundMe offer you the chance to receive money from others to help you reach your job search funding goals – no strings attached.

What do you think about P2P Lending? Leave a comment!


How to Keep Your Skills Sharp When You’re Between Jobs

job skillsOne of the hardest things to explain to potential employers is a gap in employment. It’s especially difficult if you have a skills gap. Even if you don’t have a “real” job in your field, it’s important to let potential employers know that you’ve been keeping your skills your sharp, and that you are a valuable asset.

So, as you look for work, you need to do what you can to stay on top of your career. Here are some things you can do to keep your skills sharp when you’re between jobs:

Take a Class

Perhaps your job skills have declined a bit, or you’re not quite up to date. Maybe you want to make a bit of a change and re-enter the workforce with a slightly different skill set. If this is the case, see about taking a class. You can go back to school to finish a degree, or take a seminar or course that offers a certification that you think will be valuable.

In any case, the fact that you are improving your skills and expanding your abilities through education offers a good reason for your employment gap. Not only can you boost your marketability, but you also have an ironclad alibi for your lack of a job over the course of a few months. This is important, since studies indicate that the longer you are unemployed, the harder it is to find a job. You can reduce this difficulty if you can show that you have been using the time productively.

Volunteer

If you have skills that others can use, consider volunteering. You can keep your skills sharp by helping others. Depending on your abilities, you might be able to help with PR, bookkeeping, building, project management, or any number of tasks that many charitable organizations need help with. Not only will you stay up to speed, but you will also show potential employers that you haven’t been idle.

Volunteering is also a good way to meet new people and expand your career network. You might get access to new job opportunities through the people you meet volunteering. A good cause often brings people in the community out of the woodwork, and you might be surprised at the doors that open even as you keep your skills sharp.

Start a Side Hustle

Perhaps you can keep your skills sharp by starting a side gig. Even if you want to find a new job, chances are that your skills can be used to make money for you, rather than make money for someone else. While you want to keep up the job hunt, you can also start your own business, and use your skills to help you earn a little extra.

You can talk to potential employers about your entrepreneurial ideas, as well as possibly make some money on the side. Your skills stay sharp, you look like a go-getter, and you might even make enough that the new job is unnecessary.

What do you think? Have you had to keep your skills sharp during a period of unemployment? Leave a comment!


What You Should Know About Unemployment Insurance

unemploymentWhen you lose your job, one of the first things you should do is apply for unemployment insurance benefits if you qualify. This is because unemployment benefits can provide you with a bit of income to help your family along while you are without work.

Even if you have an emergency fund, it makes sense to apply for benefits as soon as you can so that you aren’t putting the entire burden of your family’s income on your emergency fund.

Unemployment insurance is paid by employers; you don’t actually pay for these benefits. Your employer pays into a specific fund, and money is accessed by those who meet the requirements for eligibility.

Eligibility for Unemployment Insurance

First of all, it’s important to understand your eligibility. Not everyone who lost a job qualifies for unemployment insurance. Here are some of the things to keep in mind when figuring out if you are eligible for unemployment benefits:

  • How you lost your job matters – You have to have lost your job through no fault of your own. This means that you are laid off rather than fired. If you are fired because of your behavior or due to gross misconduct, such as theft or sexual harassment, you aren’t eligible for unemployment benefits. Additionally, in most cases, if you quit your job you are ineligible. There are times when you can make a case for yourself, such as quitting to escape a dangerous situation at home, or quitting because you need to care for a dependent with a disability. Talk with your state office and your caseworker to determine the possibilities.
  • Employed full-time or part-time in the past – You need to have had a job. If you are self-employed and you lose a major client, you are not eligible for unemployment benefits. You can only collect if you have been employed and you have recently lost your job.
  • An active job search is a requirement for benefits – Usually, in order to keep receiving benefits, you have to show that you are taking steps to find a new job, or that you are in training so that you qualify for a new job. You have to have this training approved.

There might also be other state requirements. Since unemployment benefits are administered through the state, you need to check with your state’s employment department to find out what the requirements are. Often, you need to register with your state’s workforce services agency, and follow instructions.

How Much Can You Get?

The amount of money you receive depends on how your state determines benefits. Usually, the state figures out how much you can get based on how long you have been employed, your salary when you were laid off, and other factors. States also receive aid from the federal government for unemployment benefits, so the amount of aid received also figures into the equation.

You should also be aware that unemployment benefits are not tax free. You are taxed on these benefits as though they are regular income. You can choose to have a portion of your unemployment benefits check withheld for taxes. This is often a good idea, even if it does reduce the amount that you end up with, since it can prevent a burden come tax time.

Understand, too, that in some states, your pension benefit (if your employer offered a contribution) might be reduced.

It’s never fun to find yourself in a position of dependence. However, unemployment insurance benefits are there to help you get back on your feet. Take advantage of them so that your family doesn’t suffer as much while you look for a new job.

What are your thoughts about unemployment insurance? Leave a comment!


6 Tools to Help You Pay Off Debt and Reach Your Goals

debtAt the beginning of this year, many made financial resolutions. One of the most popular resolutions made by Money Smart Life readers, as well as people all over the world, is to pay off debt.

If you want to pay off debt and become financially free, there are a number of tools that can help you reach your goals. From online applications that track your progress to great books that can serve as resources to help you create a plan, you can take control of your financial future and get on the right track.

The first step is learning about your situation and your options.

3 Online “Pay Off Debt” Applications

An online debt reduction application can help you see where you are, as well as create a plan to improve your situation. And, as you pay down debt, you can track your progress and celebrate your success.

1. Online Calculators

If you are trying to figure out which debt repayment route to take, Get Out of Debt Guy offers a handy Debt Plans Summary Calculator [Editor's Note: This calculator seems to not be available at the moment. Try Todd's Financial Mentor Debt Calculators.]. Evaluate where you are right now, and see what you can do to improve your situation.

2. SavvyMoney.com

Another option is to make use of SavvyMoney. This application helps you take a more active approach to debt reduction.

Enter all of your debt information into the appropriate fields and then create your debt payment goal. The application will help you put together a smart plan to help you save money on interest and pay off your debt as quickly as you can.

SavvyMoney keeps you on track and helps you visualize your progress. On top of that, you receive information on accelerating your progress so that you can pay off your debt even faster.

3. ReadyForZero.com

You can also use ReadyForZero, which is another way to track your debt progress. Much like you would with personal finance software, you can link your debt accounts to ReadyForZero so that you can see your progress as it happens.

ReadyForZero provides tips, reminders, and encouragement to help you keep on track. You can use this program to help you anticipate life without debt – a life that hopefully is in your near future!

3 Books to Help You Pay Down Your Debt

Tools to help you pay down your debt also include books. Many books include worksheets and helpful action plans that you can apply to your own situation. In many cases, it can help to read the right books before you set up your debt plan using the above tools. Some helpful get-out-of-debt books include:

1. Total Money Makeover

You may not agree with everything Dave Ramsey says (I don’t), but there is no denying that this step-by-step plan has served as inspiration for many over the years. You can follow the information in this book, and the accompanying workbook, and get out of debt and improve your finances.

2. The 1-2-3 Money Plan

Gregory Karp provides a practical guide to managing your money. Use this guide to help you beat debt and move on to the next stage of your financial development. A simple way to get started on the right path – no perfection needed.

3. Zero Debt: The Ultimate Guide To Financial Freedom

If you are in deep debt trouble, this book by Lynnette Khalfani-Cox is an excellent resource. Use this book as a tool to help you take control of your finances and dig out of the debt hole. Create your action plan with help from this valuable resource.

Editor’s Choice: Get Out of Debt Like the Debt Heroes

Our very own Ben Edwards partnered with Jeff Rose to gather an amazing collection of inspirational people and their stories on how they got out of debt. You’ll learn how people just like you escaped the debt trap!

Getting out of debt takes dedication and hard work. You need to be committed to that course of action if you want to succeed. The good news is that there are tools and resources available for you – many of them free or low-cost. Do yourself a favor this year and start on the path to debt-free living.

What are you using to help you get out of debt? Leave a comment!

This article was originally published on October 31, 2012.


How to Choose the Right Career Coach

Career CoachingAt some point in your life, you are likely to need to change jobs. You might need to switch career fields, or you might be trying to move up the corporate ladder. You might even be forced into switching things up due to a layoff. No matter the reason, one of the ways you can advance your career is with the help of a career coach.

Choosing a career coach isn’t a decision to take lightly. You want someone who can help you achieve your goals and improve your prospects. Here are some things to think about as you choose a career coach:

What Are Your Career Goals?

Usually, a career coach is most helpful when their services and techniques match your own career goals. Think about why you are hiring a coach, and what you want to accomplish. Do you want to change career fields? Do you want a promotion? Are you hoping to switch to a new company in your current career field? Are you looking for tips on how to ask for a raise? Are you hoping to get back into the workforce after a layoff or an extended absence?

The career coach you choose depends on your goals. When possible, look for a career coach with expertise in your desired field. The way an engineer searches for a new job is different from the way a teacher looks for a promotion. Try to match your career coach with your goals.

Look for Credentials

It can be difficult to find a career coach with the right credentials. States don’t usually license these professionals, and there is no “official” board. You can start out by looking for those with certifications through the Professional Association of Resume Writers and Career Coaches (PARCC) or through the International Coaches Federation (ICF). That will at least give you a baseline for quality, although it’s not a guarantee that you are working with someone that knows what they are doing.

You can also ask for referrals. Do you know anyone who has used a career coach? Were they happy with the coach? Sometimes, the best credential is a glowing testimonial from someone you trust. Remember, though, that career coaching is more about compatibility, and what works well for your brother-in-law might not work for you.

Interview Coaches First

Many career coaches will offer a short session for free. This gives you the chance to see if you can work with the coach. If someone “rubs you the wrong way,” it might be a good idea to move on, no matter how great others think they are. Any coaching situation is personal and requires a high level of trust. If you don’t get that, move on to the next candidate.

Also, realize that many career coaches do their work over the phone. In some cases, this is so that the coach isn’t swayed by your appearance. However, this works to your advantage, since it means you aren’t confined to your geographic area. You can cast a wider net to find a career coach that works for you.

At some point, you will have to consider the fee. While some coaches charge as little as $50 an hour, you are more likely to pay in the $100 per hour range. There are some career coaches that charge up to $400 an hour or more for their services. Be realistic about what you can afford, and what you need help with. Also, if you meet certain requirements, it might be possible to deduct the cost of your coaching on your tax return.

A good career coach can make a big difference in your job search, so if you decide to hire one, make sure that they are really as good as advertised.

Are you considering a career coach? What do you hope they can help you with? Leave a comment!


What to Do if You’re Declined for Credit

declined for creditBeing declined for credit is no fun. It can be demoralizing, whether you are being turned down for a credit card, a car loan, or a mortgage. Here is what to do if you have been turned down for credit:

Find Out Why You Were Turned Down

When you are denied credit, the creditor has to explain why you were turned down. You will receive an adverse action letter soon after you are turned down. This letter will tell you why you were turned down, and include information on the credit reporting agency that provided information about your credit history.

You are entitled to a free credit report from the agency that provided the information, as well as free access to the credit score that was used in determining your credit worthiness. Write to the credit reporting agency and ask for a copy of your report and score.

The adverse action letter should tell you why you were turned down – whether it was an income issue, or a credit issue. If it was a credit issue, you should go through your credit history to see what could be holding you back.

Work to Remedy the Situation

If your problem is an income issue, you will need to find a way to make more money if you want to be approved the next time you apply for credit. In some cases, the issue is that you already have a high amount of debt relative to your income. You might still have a good credit score, but the creditor might be uncomfortable straining your income with another debt payment. Paying down some of your debt can help in this instance.

When your problem is credit, though, you need to boost your credit score. Check over your free credit report. If you think that you should have good credit, look for mistakes on your credit report, as well as evidence of fraudulent accounts that indicate that someone has stolen your identity. You can clear up these problems and see improvement in your credit score.

Sometimes, though, your credit history is legitimately problematic. In those cases, you will need to take steps to improve your habits. The best things you can do are to make your payments on time and to reduce your debt load. After a few months, you should see some improvement in your credit score, and you can try to apply for credit again.

You can also get a form of credit that is easier to obtain, such as a secured credit card or a loan with a co-signer. These types of loans can help you rebuild your credit – as long as you are careful to make your payments on time and in full.

Should You Apply for Credit Again Right After Being Turned Down?

Some consumers turn around and apply for more credit right after being turned down. You have to be careful in these circumstances. Several inquiries in a short period of time can be a red flag that you are desperate for credit. It does take a few days for a credit inquiry to show up, so you might find success if you are quick about applying another time.

Really, though, you are probably better off trying to address the problem, rather than hurrying off to try to qualify for a loan again.

If you are applying for a larger loan, especially if you plan to apply for a mortgage, you will be better served by planning ahead and looking at your credit before you turn in the application. That way, you can catch problems ahead of time and fix them before you are turned down.

Have you ever been declined for credit? Leave a comment and tell us how you worked around it!

This article was originally published January 15th, 2013.



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