The Significance of Credit Scores in Retirement
Do you think your credit score matters less once you've retired? You might want to reconsider.
Your creditworthiness continues to be important in retirement, impacting your ability to apply for new credit cards, borrow funds, or even secure favorable insurance premiums.
According to Rod Griffin, Senior Director of Public Education and Advocacy at Experian, retiring does not eliminate the need for access to financial resources. Maintaining a strong credit score remains essential, ensuring you have options when unexpected expenses arise or if financial opportunities present themselves.
It's wise to proactively monitor your credit report regularly. Federal law allows you one free annual credit report from each major credit bureau—Equifax, Experian, and TransUnion. You can request these at AnnualCreditReport.com. Be cautious and avoid fraudulent websites that might charge fees or compromise your personal information.
Griffin advises reviewing your credit report at least annually to catch any errors or potential identity theft, which is especially important for retirees, who can be targets for fraud. In 2021, Javelin Strategy & Research, co-sponsored by AARP, reported that nearly 42 million adults experienced identity fraud, totaling approximately $52 billion in losses.
Another proactive measure to protect yourself against fraud is to consider locking or freezing your credit files. This can prevent unauthorized account openings. You can initiate a credit freeze or lock directly with each credit bureau here:
Equifax - http://www.equifax.com
Experian - http://www.experian.com
TransUnion - http://www.transunion.com
Maintaining activity on your credit accounts is also important. Griffin notes that accounts without activity over several months may not be factored into your credit score. You don't need to overspend; simply use a few credit cards occasionally and pay them off monthly. This practice demonstrates responsible credit management without accruing debt.
A good credit score in retirement can offer several advantages:
Easier access to credit or loans during unexpected situations.
Better terms and lower interest rates when borrowing.
Potentially lower insurance premiums, as some insurers consider credit scores.
Enhanced options when downsizing or relocating, helping secure favorable mortgage rates or rental agreements.
Increased ability to assist family members financially or through co-signing loans.
Remember, your credit score remains an important financial tool during retirement. By regularly reviewing your credit report, locking your credit files, and responsibly managing your credit, you'll be better prepared to navigate financial needs throughout your retirement years.
Disclaimer: Blog posts by Hohenshell Financial, Inc. provide general informational content only and are not personalized financial or investment advice. Investing involves risks, including potential loss of principal, and past performance does not predict future results. Readers should carefully consider their financial goals, risk tolerance, and unique circumstances before making financial or investment decisions. Hohenshell Financial, Inc. does not guarantee specific outcomes and is not liable for decisions made based on blog content. Always consult a qualified financial professional for personalized advice.