In the midst of polishing your resume, scouring job boards and meeting with recruiters, it's easy to stop paying attention to your credit.
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But taking steps to protect your credit during a period of unemployment will make it easier to recover from the financial setback and may even help you land a job.
For one thing, even if you're not looking at your credit report*, your prospective employer may. In 2010, 60 percent of members of The Society for Human Resource Management ran credit checks on at least some potential hires, up from 25 percent in 1998.
Experts suggest you follow these seven tips to safeguard your credit score if you're unemployed, or if your job situation is shaky:
1. Consider payment protection: In exchange for a fee, payment protection insurance puts your payments on hold for a predetermined period of time. It's offered on debts such as credit card balances, car loans and even mortgages.
"You won't qualify for payment protection after you lose your job, so research the options now," advises Rodney Anderson, author of "Credit 911: Secrets and Strategies to Saving Your Financial Life."
Read the fine print so you know exactly what protection you're getting and how much it costs.
2. Request a credit report: Before you send out resumes or schedule interviews, order a copy of your credit report from each of the three major credit bureaus. You're entitled by law to one free one per year if you get them through AnnualCreditReport.com .
"Knowing the details of your credit report can help you explain any possible red flags during an interview," says Anderson.
According to the Fair Credit Reporting Act, you're also entitled to a free credit report if you are unemployed and searching for work.
If there is something in error on your credit report, you can have it corrected. Or if there is something accurate but possibly damaging to your chances of finding a job, the three major credit bureaus -- TransUnion, Equifax and Experian -- allow you to write a 100-word letter, explaining the circumstances to anyone who requests your report.
3. Stick to cash: Without a regular paycheck, it can be tempting to charge everything from groceries to a new interview suit with plans to pay the balance later.
"If you pay with cash, you tend to be more disciplined about how much you're spending," explains Deborah McNaughton, president of Professional Credit Counselors Inc. and author of "The Essential Credit Repair Handbook."
The other benefit to using cash to cover expenses: It ensures you have available credit in case of an emergency.
Just be sure the bills in your wallet did not come from a cash advance on your credit card. Cash advances come with additional fees and higher interest rates, which are charged beginning the instant you take the cash.
4. Meet the minimum: When your credit card bill comes in the mail, focus on making the minimum payment, not paying down the overall balance.
"You need to maintain your cash reserves," says Leslie Linfield, executive director of the Institute for Financial Literacy. "Now is not the time to try to pay off your credit card balances."
Make sure to make minimum payments on time. Some credit card issuers will report even slightly late payments to the credit bureaus, which will hurt your credit score.
"Depending on your score, one 30-day late payment can drop your score as much as 100 points," adds Anderson.
You can resume your goal of paying off credit card debt after you land a new job.
5. Communicate with creditors: If you're having trouble making your monthly payments, pick up the phone.
Linfield suggests calling creditors to find out about financial hardship programs. Often, creditors will agree to lower interest rates or set up more affordable payment plans.
"Creditors want to work with you," she says. "They have programs you will never know about unless you call."
Don't be embarrassed to admit that you are struggling to pay your bills. Linfield notes that in a time of chronic unemployment, creditors receive these calls all the time.
Making the call before your accounts go into collections is essential for safeguarding your credit score.
"Once your account is turned over to collections, your credit score will take a huge hit," she says.
6. Defer debts: The easiest debts to defer during a period of unemployment are student loans. Call your lender and ask for an "economic hardship" deferment, which allows you to postpone payments and stops interest from accruing on the principal while you're unemployed.
"If you have been unemployed for at least 30 days, start the deferment process," says Linfield.
Linfield is quick to point out that deferment has no impact on your credit score because deferred debt is not reported to credit bureaus as missed or late payments.
You may also be able to defer your mortgage or car payment for 30 to 90 days, giving you a bit of breathing room if things are tight. Call your lender to ask about your options.
7. Stop shopping for credit: When you lose your job, it might be tempting to apply for new credit cards to ensure you have as much available credit as possible in case of emergency. Anderson cautions against this approach.
"The chances of getting approved for a credit card when you're unemployed are not very good and every inquiry [on your credit report] can ding your score," he explains.
Applying for additional credit cards also increases the likelihood you'll accrue more debt and be unable to afford the payments when the bills come in.
Following the tips won't ease the pain of unemployment, experts say, but they will keep trouble from infiltrating into another area of your financial llife.
Correction: As originally published, this story referred to employers checking your credit score. While they may and do check your credit report, credit bureaus do not provide the score derived from the report.
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