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This Blog is full of tips that retirees should know about their credit score.
In retirement years, purchases such as buying insurance, buying cell phones, renting cars, using the debit card in particular, buying cars and even applying for a mortgage may require a strong credit score. Yet many retirees become debt free and stop paying attention to their credit score because they don’t need to borrow money. With data breaches happening routinely. Retirees really need to stay vigilant about their credit profiles and it’s easier than ever to monitor your credit score using websites like Experian, Equifax, or TransUnion. These websites charge a small monthly fee. Typically, you can get credit monitoring for as little as $5 a month.
And did you know that if you paid off all of your debt after 2 years, your credit score would drop to zero? What??? Is that shocking? But here’s the reason, credit score is based on how you handle borrowing money and your payment history in the past 2 years. So if everything’s paid off and you have no payment history, then your credit score goes down to zero because it’s the biggest determinant of your credit score. Also, the length of your credit history, this is where most retirees actually can really shine, carries less than half of your overall credit payment record. So here are some top tips retirees should know about their credit score.
Tip Number 1: If you do not want to borrow money, you can use the Experian boost program to add things like utility and phone payments to actually keep your credit score strong and you could get credit for your on-time payments of those utilities and phone bills and things like that that you’re paying every month anyway, cable is another example.
Tip number 2: Consider freezing your credit. If you’re retired and you don’t plan to move or buy a car or get a mortgage in the near term, maybe it’s a good time to put a freeze on your credit with the 3 main credit bureaus, Equifax, TransUnion, and Experian. If you do this, creditors cannot access the information until you remove the freeze with a special pin number and you have to keep that pin number in a safe place and remember it.
Tip number 3: Closing out old accounts is okay if you don’t plan to use your credit score in the near future, that’s just fine. But if you close out accounts and then plan to use your credit, actually closing accounts can lower your credit score. It’s okay to clean up these orphan accounts that you never use, especially if you don’t plan to borrow money in the near future that’s fine.
Tip number 4: Monitor your credit carefully. And if you plan to get a mortgage, like a reverse mortgage, if you’re thinking about that, where a lender provides funds to homeowners 62 or older and it’s tied to the equity in their house, be aware that your credit history is now part of that equation.
Tip number 5: Avoid co-signing on debt. You know, most of us would do anything and everything to help our family members. Yet you would not believe how many times I speak to retirees that their credit score got destroyed because they let you know Susie’s cousin, they co-sign on a car for them and she quit making payments and then they left grandma or grandpa with the bill.
I am offering you a free report on the top things retiree should do to protect their credit in retirement. you can call our office at 719-319-1802. To Receive a FREE Report on the Top things retiree should do to protect their credit in retirement, you can call Barb Schlinker directly at 719-319-1802