By the time you retire, you have probably already built your credit rating for decades. In fact, seniors tend to have the best credit scores of all generations, according to the credit bureau. Experiential. But even though this time in your life is meant to be relaxing, that doesn’t mean you can completely let your guard down when it comes to credit.
Good credit is important throughout your adult life, including your later years. Here are four times when your credit history matters.
1. Downsize or move to another location. Maybe you want to move to a warmer climate or to an area closer to family. Or you may decide to save money and cleaning effort by downsizing your home. Unless you can pay cash for your new home, you will need to apply for a mortgage. The better your credit, the better your chances of qualifying for the lowest mortgage rates.
Even if you decide to rent a property, whether it is your primary residence or a vacation home, you will need good credit. Most landlords perform credit checks to reduce the risk of ending up with tenants who can’t pay on time each month.
2. Get the best credit card. For many older Americans, retirement is the time to travel. A good travel rewards credit card is a great tool for saving money on your dream vacation. You’ll earn points for your regular spending on the card (and often bonus points for travel expenses), which you can potentially cash out for free flights and hotel stays. Plus, most airline cards offer perks like free checked baggage, trip cancellation insurance, and free rental car insurance.
A good credit score gives you access to rewards cards. These premium programs can significantly reduce the cost of frequent trips.
If you’re the type who likes to stay closer to home, cash back credit cards can help cover the cost of everyday expenses. As long as you pay off your balance in full each month and don’t spend more than you normally would to earn points, you should come out ahead with a rewards card.
In addition, credit cards offer more protections to consumers than debit cards. This can be especially important for older consumers, who are often targeted by scammers. Zero liability policies mean that you are not responsible for fraudulent charges on your credit card, provided you promptly report any suspicious activity to your card issuer.
3. Embark on a second career. For many older people, retirement does not mean leaving the workforce completely. If you want to get a part-time job, change careers, or start a business, a bad or outdated credit history could create barriers. Some employers check the credit reports of job seekers. The same goes for small business lenders and even some commercial providers. A strong credit history helps assure them that you are responsible.
4. Entry into assisted living and nursing home care. No one likes to think about it, but there may come a time when you will need to move into a facility that provides access to medical care. Assisted living and nursing homes are expensive, and they don’t take Medicare for long-term stays. Managers at these facilities will want to see that you can make timely payments for your care, and a good credit rating helps convince them. A bad credit history could prevent you from being allowed to live there.
How to maintain your good credit score. It’s easy to drop your credit report if you don’t have any outstanding loans. An easy way to keep your record active is to regularly use a credit card and pay the bill on time every month, even if it’s just a small expense like a full tank of gas or a load of groceries. . If you don’t use a card, the issuer will eventually consider it inactive and close the account, damaging your credit score.
It is also important to continue check your credit report to make sure that it is free of errors and that you have not been the victim of fraud. You can get a free copy of your credit reports from the three major credit bureaus once a year at AnnualCreditReport.com.