Financial Advice
Rich Best has spent 28 years in the financial services industry, as an advisor, a managing partner, directors of training and marketing, and now as a consultant to the industry. Rich has written extensively on a broad range of personal finance topics and is published on several top financial sites. Recent books include The American Family Survival Bible and Annuity Facts Revealed: What You MUST Know Before You Invest.

4 Reasons Your Credit Score Matters During Retirement

4 Reasons Your Credit Score Matters During Retirement

When you enter your retirement years, you can leave a lot of things behind, like that awful commute and your 9 to 5 wardrobe. And, if you’ve paid down your mortgage and other debt, it may seem like you can leave your credit score behind. But, you may want to rethink that. Even though you may have left your borrowing needs behind you, there are plenty of reasons why maintaining a good credit score is important during retirement.

Lower Insurance Costs

The premiums you pay for auto and homeowners insurance are based in part on your credit score. People with good credit are deemed to be more responsible and a better credit risk by insurance carriers. Retirees should always be on the lookout for lower insurance rates and, having a high credit score will open up more options.

Lower Refinancing Rates

If you’re one of the increasing number of retirees carrying a mortgage into retirement, a high credit score can open more doors to lower rates. It could also ensure easier access to your equity if needed through a cash-out refinance.

Moving or Downsizing Your Home

If you’re like many retirees who want to downsize their home or relocate to be closer to their kids, having good credit clears the way for cheaper financing or refinancing. In the event you may have to lease a home for a period of time, having good credit ensures the quick and easy approval of a property owner.

Emergency Expenses

If you ever find yourself with depleted cash reserves at a time when an emergency expense arises (i.e., major home or car repair, major medical expense, etc.) you may need to borrow some money. By maintaining a good credit score, you can have access to personal loans or higher credit card limits with reasonable interest rates.

How to Maintain a Solid Credit Score in Retirement

To maintain good credit in retirement, you can’t rest on your credit laurels of the past. It’s important to actively use your credit to maintain a strong payment history. Long periods of credit inactivity can actually hurt your credit score. The key is to use your credit cards to pay for regular expenses, such as groceries and gas, and then pay the balance in full each month.

You should also monitor your credit closely. As a retiree, you are a main target for identity thieves who can potentially destroy your credit history. It’s important to track you credit score, so if it should change, you can look at your credit report to learn the reason for the change. You are eligible to receive three free credit reports a year – one from each of the three credit reporting agencies, Equifax, TransUnion and Experian.

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