You have tried throughout your life to have a good credit score so you can take out loans at favorable interest rates, and in turn, enjoy a good lifestyle.
Now that you’re entering or in retirement, does your credit score matter any more?
Your credit score in retirement
Yes, your credit score matters quite a bit even in retirement. Just because you’re in retirement doesn’t mean you can stop worrying about your credit.
Being approved for good rewards credit card
You probably don’t plan on stopping to use your credit card in retirement and you’ll want to have access to either more credit or the lucrative rewards often given with cards.
The banks get quite a bit of retired credit card applications and they look favorably on applications with good credit scores. If your score is good, you’ll have access to these cards, especially premium level cards, which can offer great rewards.
Traveling is your hobby and you want to continue
Post-retirement is the best time to travel; fulfill your dream of seeing various parts of the world and experience new adventures. A great way to save money is to use a credit card with travel rewards. The three primary types of travel cards: airline reward cards associated with specific airlines (e.g. Delta), hotel reward cards associated with specific hotels (e.g. Marriott), or general travel reward cards that allow you to use the points across various airlines and/or hotels.
Getting insurance coverage at good rates
Insurance companies look at a person’s credit score when considering your eligibility and insurance premium. As a result, a good credit score can mean the difference between a high and a low premium.
Refinancing mortgage and saving money
Everyone is not fortunate enough to begin retirement without any outstanding loans. A common case is your outstanding mortgage.
If you want to opt for refinancing and replace your current home loan with a new one at a reduced rate of interest, a good score can help.
How to maintain and improve your credit score
Now that you know the benefits to maintain a good credit score at retirement, it’s time to know how to do so.
Plan a budget and monitor your expenses
Budgeting is the first step to managing personal finance and improve credit score. If you can’t monitor where your money is going, you won’t be able to manage your finances efficiently.
Even in retirement, plan a budget, review it, and make changes to it if necessary. Your financial situation is bound to improve if you can plan a realistic budget and follow it.
Do not close credit accounts abruptly
Closing your credit cards, even if unused, is not a good idea. First of all, it will reduce your available credit, thus negatively impacting your credit utilization ratio.
Moreover, closing your oldest credit card will reduce the length of your credit history, which can reduce your credit score. About 10% of your credit score is dependent on the length of your credit history.
Never miss any payment date
Another great way to maintain or even improve credit score at retirement is to always pay the bills on time. Credit card companies report your payment history, including missed payments, to the credit card bureaus. Paying your credit card bills, utility bills, etc. by the due date will help you keep a good score.
Spotting identity theft
Do you know that retirees are prime suspects for identity theft? If you don’t check your credit reports regularly, you might not realize you’ve become a victim of identity theft.
Also, the credit bureaus aren’t perfect and sometimes have errors on your report. These errors can negatively impact your credit score, so it is important to check find and report any errors. You can obtain your free report here.
Some more tips…
- Always keep your infrequently used credit cards in a safe place.
- While a balance on your credit card can be good, don’t max out any cards.
- Have at least one credit card to improve your score.