Do You Still Need to Manage Your Credit Score as a Senior?
Pretending like your credit score doesn't matter anymore could seriously tarnish your golden years.
Worrying about credit scores is a young person’s game, right? After all, it’s in your twenties to forties when you’re out buying houses and cars, racking up miles on your awesome rewards card, and purchasing thousands of fake followers for your Instagram account. You know, the three basic reasons that people care about their credit …
In theory, seniors shouldn’t have to worry about their credit scores. Once they’ve paid off their house, they’re pretty much done borrowing money. And if you don’t need to borrow money, then you don’t need to worry about your credit score. You can kick back, relax, and enjoy all those fake Instagram followers you bought those many decades ago.
Unfortunately, things aren’t that simple. Cost of living doesn’t magically plummet when you retire. There are still going to be situations where you need a good credit score in order to borrow money—plus situations where you wouldn’t even think a credit score is necessary, but it is! It could even affect your application for assisted living or long-term care.
If you’re a senior, you still need to worry about maintaining good credit.
4 reasons you’ll need good credit as a senior.
It’s easy to survey the golden years ahead of you and assume that everything will be finally a-okay—especially if you’ve spent the previous decades building up a sizeable nest egg to see you through. And while having more savings on hand is certainly going to help, there are still tons of situations where you might need a good credit score.
- Tickets and reservations: One of the great things about retirement is that you can finally travel more! Unfortunately, a bad or non-existent credit score could mean paying more for hotel reservations and plane tickets. Plus, not having a credit card means getting a hard credit check if you try to rent a car. Seriously, that’s a real thing. Maintaining your credit will help you stretch your travel budget even further.
- Downsizing: Many seniors decide to move to a smaller home or apartment after they’ve retired—after all, a house that you bought to raise a family in will often seem way too big once everyone’s grown. But whether you decide to buy or rent, you’ll still need good credit in order to secure that new home. Unless you can buy a home entirely in cash, you have to have good credit.
- Insurance: While health insurance can become more manageable in retirement due to Medicare, there are other types of insurance that won’t be so simple. Home, renters, and car insurance all take credit scores into account when determining your rates. For seniors living on a fixed income, they want all the savings they can get. Spending more money on homeowners and car insurance doesn’t make any sense.
- Basic living expenses: When you’re a senior without a sizeable nest egg and are relying on government benefits or another form of fixed income, cost of living can easily outpace your resources. In cases like this, a senior might need to borrow money in order to make ends meet. It’s not a good solution, but it might be the best one they have. A better credit score will allow for far better loan terms.
Now you can see why maintaining a good credit score throughout your golden years is important. Here’s what you can do to make sure your credit stays golden, too.
5 ways seniors can maintain good credit.
Taking your credit score from bad to good can be a little tricky. It’s not impossible, by any means, but it is going to involve paying down a lot of open debt and keeping to a rigorous payment schedule. If your score is already good, however, maintaining your good credit is much simpler. Here are five things seniors can do to maintain their credit post-retirement.
- Check your credit report: You credit score is based off the information in your three credit reports from TransUnion, Experian, and Equifax. You can request one free copy of your report from each of them once a year. Check one report every couple of months to make sure there are aren’t any errors and to prevent someone from stealing your identity. Scammers love targeting seniors, and checking your report regularly will help keep you safe.
- Keep old accounts open: Paying off a credit card feels great, but that doesn’t mean that you should close the card out. A card that you’ve maintained for years in good standing is dynamite for your credit—as the length of your credit history is one of the five factors used in determining your score. Keep that old account open, and let the good credit vibes keep flowing. You can even request a higher balance, which will look even better. Just be careful that you don’t let those open balances tempt you into overspending.
- Use your credit cards responsibly: The best way to use credit cards is to never exceed your means. Only put money on your credit card that you already have in your bank account. If you use your card at the grocery store, for instance, make sure you pay that balance off immediately. And even if you do let a few purchases rack up, never exceed 30% of your total credit limit. In the meantime, you can rack up those rewards all while keeping your credit score in tip-top shape.
- Pay your bills on-time: This might seem like it’s obvious, but you know what they say about common sense: It ain’t really that common. Payment history is the number one factor in determining your score, making up 35% of the total. This means that paying your bills on time every month is the best thing you can do to maintain good credit. If you already have good credit, this is simply something you’ll want to keep up. If you don’t, well, there’s no time to start like the present.
- Be very careful about cosigning: Helping your kids, grandkids, or even a close family friend secure a loan might seem like the least you can do to help them out. However, cosigning a loan or a credit card means that those balances will show up on your credit report, which could tank your overall score. Plus, if the other party defaults on the loan, you’ll be the one who’s on the hook for repaying. Being a cosigner can be a very nice thing to do for someone, but it can wreak havoc on your credit. We aren’t going to tell you not to do it, but it’s something you should avoid if possible.
Once you’ve retired, you have to be careful with your money. Whether you’re fresh out of college or checking into a senior living community, maintaining your credit score is a major factor in your overall financial health.
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The information contained herein is provided for free and is to be used for educational and informational purposes only. We are not a credit repair organization as defined under federal or state law and we do not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit. Articles provided in connection with this blog are general in nature, provided for informational purposes only and are not a substitute for individualized professional advice. We make no representation that we will improve or attempt to improve your credit record, history, or rating through the use of the resources provided through the OppLoans blog.