Showing posts with label increasing credit score without debt. Show all posts
Showing posts with label increasing credit score without debt. Show all posts

Wednesday, September 28, 2016

Credit Scores and Retirement

Once you retire, your credit score will still be important.  Even if your mortgage is paid off and you have no plans to borrow money ever again, you will still want to carefully monitor your credit rating and make sure there are no issues with it.

When the credit-reporting company, TransUnion, polled a group of Baby Boomers, nearly half of them said that their credit rating would no longer be important after they retired.  This misconception, however, could cause them to have unexpected problems later in life.

Your Credit Rating Could Drop During Retirement

Even though your credit rating will continue to be important when you retire, the truth is that the score normally declines for most people as they get older ... even if they have an excellent credit history and solid assets.

Why will your credit rating go down? 

Below are some common reasons:

If you are like most people, you will use less credit as you age.

Using your debit card to immediately pay cash for purchases does not help you maintain your credit score.

As you pay off your house, car, credit cards and other debts, your credit report and activity become "thin" and could virtually disappear.

Why is a Low Credit Rating a Problem in Retirement?

Today, many people are living 20 years or more after they retire.  While you may think you will never again make a large purchase during the remainder of your life, eventually you may want to downsize to a smaller home, purchase a new car or have other credit needs.

Lenders will look at your credit score if you decide to get a mortgage on a new home, take out an auto loan, apply for a new credit card, or co-sign for a student loan for one of your children or grandchildren.  If you decide to rent an apartment in a retirement community or other location, the management company and the utility companies will want to see your credit score.  In addition, your auto and homeowners insurance premiums will be higher if you have a low credit score.

How Can You Improve Your Credit Score Without Adding Debt?

The last thing you want to do in order to maintain a high credit score is take on new debt.  However, experts recommend some actions that will improve your credit score ... and they don't involve adding debt.

* Every couple of years, ask your credit card issuers to raise your limits by $500 to $1000.  Whenever you have a high limit, but a low balance, your credit score gets a boost.

*  Do not close old accounts, even if you rarely use them, for the same reasons mentioned above.  It is better to have lots of available credit, but a low balance.

*  Keep your main credit cards active by occasionally making a modest purchase using one and paying off the balance quickly.

*  Be careful to make all your payments on time.  If you travel, set up auto payments with your bank so that none of your payments are ever late.

*  If you have let your credit completely lapse and you don't have any credit cards, you may need to rebuild your credit history.  To do that, you may have to start with a secured card from your bank.

*  Check your credit report regularly to be sure there are no errors on it that could drag down your credit rating.  You can get a free copy of your report every year from each of the three major credit-reporting companies.  You can contact them individually or you can go to  You can also sign up on the free site to find out your current credit rating, get suggestions on how to raise it, and see your credit reports.

Take the above steps, protect your credit, and monitor your credit reports regularly.  Just because you are retired, you should not forget these simple precautions.

If you are interested in learning more about financial planning for retirement, common medical issues, where to retire, Social Security, Medicare or more, use the tabs or pull-down menu at the top of the page to find links to hundreds of additional articles.

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