Six Reasons You Need Good Credit in Retirement
Your credit score is still important for several reasons
Regardless of the credit score you've maintained throughout your adult life, it's a good idea to strive for good credit during retirement. While you may not think it's as big a concern in your later years, the reality is that you might need good credit for a variety of things.
Retiring itself should not have any bearing on your credit. What will matter is whether or not you continue to make your payments on time and keep debts under control.
"If retirement leads to a lack of income such that you start making late payments, then your scores will suffer," says Brendan Harkness at Credit Card Insider.1 "Additionally, if you carry a large amount of credit card debt relative to your credit limits, then your scores will suffer. If you’ve prepared for retirement by getting out of debt, then your scores will benefit. If you’ve paid special attention to paying down credit card debt, at any age, you can almost certainly expect your credit scores to improve."
Here are six reasons good credit is important after you’ve retired:
1. You may still face credit checks
Just because you have retired, that doesn’t mean you will no longer face credit checks. If you need to apply for a loan for any reason, or even if you just wish to rent a new apartment or house, a credit check will most likely be run, and if your credit is not in good shape, you may be denied or may have to pay a higher interest rate. The rules don't change because you're in a different phase of your life. Maintain a good credit score to help ensure this doesn't become a problem when you really need your credit to come through.
2. It may help with your long-term care needs
Good credit may help you in the event that you require long-term care. Your credit will no doubt be taken into consideration if you or your spouse need to move into an assisted living facility.
3. You may need good credit for unexpected expenses
Unexpected expenses can come along at any point in our lives, and even if you try your best to be prepared for them, there are times when financial assistance is needed. Medical bills can get incredibly expensive when emergencies or chronic illnesses occur. Having good credit may be the difference between getting approved for a much needed loan, and being in serious financial trouble. Paying unexpected expenses directly out of your retirement fund can create its own set of problems, including fees and penalties.
4. Get better credit cards for better rewards
Another reason to maintain a good credit score is to get credit cards that offer good rewards and points. These cards can get you discounts on travel expenses or cash back. If you have mediocre-to-poor credit, card issuers are unlikely to approve your application.
5. You may want to co-sign a loan
Even if you don't need to take on any new financing yourself during your golden years, you may wish to co-sign on a loan for an adult child or a grandchild who may not have the good credit you do. A family member may need your help to get a mortgage or a new car, and your good credit may be able to make the difference for them. Just be sure this is a move you're comfortable making, since you can find yourself on the hook if they aren't making the payments.
6. If you need to get a job, the employer might take your credit into consideration
A lot of retirees find that they want or need to go back to work. If you're looking for a new job, there's always the possibility that your potential employer will run a credit check, and a negative result may discourage them from hiring you.
The bottom line is that you shouldn't let the fact that you're entering retirement cause you to stop being concerned with how good your credit is. It may, in fact, be more important than ever.
The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of Zions Bancorporation, N.A. Member FDIC