You might be able to get a personal loan approved while on maternity leave to help you survive the unpaid time off.
But that does not always mean you should borrow the money!
Parents with good credit could have trouble repaying the lender if they lose their job if FMLA does not apply or runs out after twelve weeks. A mom or baby could have health problems, leading to unpaid medical bills.
Parents with bad credit could have trouble repaying the lender because the combination of lost income and extra expenses deepens their financial problems. They might do better with several alternatives.
Personal Loan for Maternity Leave Good Credit
It is much easier to get a personal loan during maternity leave when you have a good credit history (FICO or Vantage score of 670 or higher). However, you may want to verify FMLA eligibility and validate your pregnancy delivery costs before hitting the submit button.
It is more sensible to get a personal loan during maternity leave if the Family Medical Leave Act (FMLA) safeguards your job while you are at home bonding with your baby.
Lenders may want to verify your income and employment when underwriting your loan and may contact your employer, which is where the FMLA comes into play.
FMLA covers only 56% of workers nationwide, providing twelve weeks of legal job and healthcare protections for eligible parents working for covered employers.
- Eligible Employees
- 12 months of tenure with the company or agency
- 1,250 hours worked over the preceding 12 months
- Covered Employers
- All public (government) agencies and departments
- All public and private primary and secondary schools
- Companies with 50+ employees working within a 75-mile radius
Be careful about borrowing money when FMLA does not guarantee your return to work. If you lose your job, it might prove impossible to repay the loan on time and according to the terms.
You can get a personal loan during maternity leave after a complicated pregnancy or delivery. Still, it may not be a good idea to take on additional debt while bonding with your newborn at home.
Unpaid medical bills cannot appear on your consumer report until twelve months after incurring the charges. In other words, the lender will never know that you suffered massive debt connected with childbirth.
- Unreimbursed medical expenses for mom’s hospitalization
- Additional NICU charges for premature infants
Please be careful about borrowing money before your health insurance processes claims for your pregnancy and delivery. It might prove impossible to repay the loan on time and according to terms if your unreimbursed medical expenses bust your budget.
Personal Loan for Maternity Leave Bad Credit
It will prove more challenging to get a personal loan while on maternity leave if you have bad credit history appearing on your consumer report (FICO or Vantage score below 630).
You might want to consider several alternatives in addition to factoring in FMLA eligibility and unreimbursed pregnancy and delivery costs.
Many parents who cannot get a personal loan while on maternity leave due to bad credit are often eligible for other government programs. Low incomes correlate with adverse payment history on consumer reports.
Government assistance during maternity leave is hit or miss based on where you work. For instance, some states have Short-Term Disability or Paid Family Leave. However, several nationwide programs reduce pertinent costs for low-income families.
- Temporary Assistance for Needy Families (TANF)
- Women Infants & Children (WIC)
- Low Income Home Energy Assistance Program (LIHEAP)
- Childcare Assistance Programs
Parents who cannot get a personal loan during maternity leave due to adverse history on their consumer report can utilize their Flexible Spending Account (FSA) without a credit check to unlock excellent financing benefits.
Medical financing with no credit check via your FSA is feasible, given little-known IRS rules. Plus, your pre-tax payroll contributions reduce your exposure to three possible levies.
- Federal income taxes
- State income taxes
- FICA payroll taxes
First, your employer must immediately reimburse any qualifying expense up to the annual contribution election. You have up to 52 weeks to repay the loan using pre-tax payroll contributions.
- While on leave of absence from work
- Even if the account balance is lower
Second, your employer must allow all employees to participate in the FSA without pulling their consumer report or checking their credit score, allowing them to borrow up to the annual contribution limit.
- $3,050: individual
- $6,100: two parents
Your unreimbursed pregnancy and delivery expenses qualify for this interest-free, FSA-enabled loan for adverse payment history with no credit check.
Parents who cannot get a personal loan during maternity leave due to bad credit history on their consumer report have another option. They can take advantage of buy-now-pay-later schemes if they need to purchase baby cribs and other furniture for their newborn.
Buy Now Pay Later baby furniture allows you to purchase cribs, cradles, changing tables, and rocking chairs with monthly installments. Third-party finance companies often approve consumers without a traditional credit check.
Of course, new parents facing unpaid time off from work combined with extra medical expenses should avoid borrowing money at all costs. Remember the second-hand market if you need furniture for your baby. Infants quickly outgrow cribs leading to unwanted clutter.
Parents who cannot get a personal loan during maternity leave due to adverse history on their consumer report can take money from a qualifying retirement plan without a credit check.
IRS rules allow qualifying retirement plans to disburse funds under limited circumstances. Consult your plan document and summary description to see how they handle three options.
- Hardship distributions for an immediate and heavy financial need
- Early withdrawals before age 65 subject to a 10% surcharge
- Loans that do not incur taxes if you follow the repayment schedule