We spend a good chunk of time over the course of our lives fixating on our credit score. Just the same as before, you should spend some time thinking about your credit score in retirement as well.
Part of this fixation is because we’ve been scared out of our minds at the number of people we know who’ve had there identities stolen, and credit ruined. While the other reason is just to ensure we can buy all the stuff we want that is dependent on our credit score while getting great rates.
Both reasons are legitimate, and if you think that your credit score in retirement is any less important, you’d be sorely mistaken. Here are a number of reasons you should still be keeping a watchful eye on your credit score regardless of where you are in your working career.
Refinancing – As with our working days, being able to refinance your home when interest rates are low can save a bundle of money. It goes without saying that the bank is going to take a good look at your credit score, and just as with any original mortgage, the rates and loans you are eligible for will be drastically better if your credit score is in good shape.
Identity Protection – This one is very important for retired people, because many scammers are specifically targeting people in your age bracket. If you are over 65, you probably have even an larger target on your back because some thieves think you may be more susceptible to their scams, or aren’t checking to ensure your identity has not been stolen. Do yourself a favor and checkout some of these identity protection companies that will help monitor everything for you.
Credit Cards – Building credit card debt in retirement is never recommended, but if you responsibly pay off your credit card every month, using them can be of great benefit. With the perks that almost every credit card on the market is offering these days, it feels like we’re throwing money away sometimes if we don’t buy on credit.
At a minimum, you should be using a credit card that offers you 2% cash back on all of your purchases. From there, depending on how motivated you are, certain cards give much higher percent returns for some type of purchases. If you manage which credit cards you use for certain categories of goods, you can make more than 5% back on all your purchases.
For travel lovers, which many of you will become in retirement, you can get cards from many of the major airlines offering miles in return which can help to offset travel costs.
That said, if you don’t have a good credit score in retirement, you can say goodbye to many of the options you may have had with a good score.
New Car – For you car nuts out there, this one will certainly get you thinking. For many car obsessed people out there, this will be one of the main pass-times of their retirement. You may be planning to purchase one, or many new vehichles over the course of your retirement. As with other loans, don’t forget that auto-loan rates will be determined heavily based on your credit score, so you want it to be as high as possible to ensure you don’t overpay on a loan.
Car Insurance – Since they hit you with it on the car loan, they might as well do it again with the auto insurance. Yep, auto-insurers also factor in your credit score when coming up with your rates. It’s pretty easy to see that between a car loan, and insurance that your cost for a car can be drastically different based on having a good credit score. Since you’re on a fixed income at this point, just a couple hundred bucks a month might make the difference on getting that dream car.
Starting a business – We usually save this one for last since most people think it would be completely nuts to retire, and then decide it would be a good idea to start a business. But, if that’s your thing, you’ll want to make sure your credit score is in good shape. This really goes back to the credit cards and loans again, since many of you will want to use one or the other to help start the business rather than all cash out-of-pocket. Again, both of these cost will be considerably lower if you have good credit.
There are a handful of reasons why your credit score in retirement matters. It comes down to the fact that while your working hours may be slowing down, you’re probably ramping up a number of other activities you just didn’t have the time for. If you want to maximize the fun you can have in retirement at the lowest cost, it’s definitely a good idea to keep an eye on your credit throughout your retirement.