Why Your Credit Still Matters After Age 50
Even if you are retired or close to retirement, a strong credit score remains one of your most useful financial tools. It can lower your borrowing costs, increase your options and help you stay financially fit when life changes – whether that means downsizing, moving or covering unexpected expenses.
Read on for the benefits of maintaining a strong credit score, and how you can do so.
The benefits of solid credit after 50
Lenders review your credit score when you apply for a loan so they can determine your loan options, including your interest rate. But financial companies aren’t the only ones crunching your numbers. Insurers often use credit scores to measure your risk and set higher premiums for people with lower credit scores. For example, the average homeowner with a low credit score will pay about $2,000 more per year (or double) in home insurance premiums than a neighbor with a similar profile but a high credit score, according to a report from the Consumer Federation of America.
Landlords may also review your credit report before approving your tenant application. While your days of taking out personal loans and getting home equity loans may be over, you may need a home equity line of credit (HELOC) in the future. Some retirees use their home equity to cover expenses, and lenders will check your credit score when reviewing your application and offering you options.
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How to keep your score strong
There are several things you can do before and after retirement to help maintain a strong credit score.
Keep your credit active as you get older
The length of your credit history is an important part of your credit score. Having older accounts increases the average age of your account, which may justify keeping no-fee cards open. You can set up a small automatic charge every month and pay it to take care of account activity.
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Monitor your credit
Platforms like Experian, Equifax and TransUnion allow you to monitor your credit and receive notifications about any changes. You can get a free copy of your credit report each year from each of the three companies.
It’s a good idea to check your credit report regularly to make sure there are no fraudulent accounts or errors. You can contact one of the credit bureaus to correct any information about late payments, past due items and other information that may harm your credit score. Each credit bureau has a specific dispute process that can help you correct errors.
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Pay on time
An important part of maintaining a good credit score is making timely payments.
Setting up automatic payments can ensure you make the right payments even if you forget to check your financial accounts.
