Is it important to maintain a high credit score in retirement? When you’re getting closer to retirement, you may not be focused on your credit score, assuming that your borrowing habits will change. And, for many people, they do.
However, even during your retirement years, your credit scores can still be important because existing creditors will still pull your score from time to time. Therefore, it’s smart to continue to pay attention to your credit scores.
If you’ve been vigilant about keeping your credit scores high in the years prior to retirement, there’s a good chance you’ll maintain those high scores throughout your retirement years. And, the good news is that retiring has zero impact on your credit scores.
Your credit score is affected by how well you manage your financial liabilities and how much debt you owe. For example, if you continue to make loan payments on time, your scores will continue to benefit. However, if you’re not financially prepared for retirement and begin to make late payments, your scores will suffer.
Just as important to maintaining high credit scores is the amount of debt you carry on credit card accounts. If you carry a large amount of debt in relation to your credit limits, this will have a negative effect on your scores.
Your financial plan is about the choices you make on the road to retirement that will help you live life to the fullest when you retire. If you’re concerned about your credit score and how it will impact you upon retiring, it’s a good idea to seek the advice of a CFP in San Diego.
Don’t make these mistakes
While older consumers, in general, tend to have higher scores than their younger counterparts, there are some mistakes to avoid during retirement that could have a negative impact on your credit scores. Credit scores matter even in retirement. If your credit scores drop, it can have an effect on car loans and credit card approvals, insurance premiums and refinancing mortgages.
Take care before you close credit card accounts because that could result in an increase in your credit card debt-to-limit ratio which, in turn, could cause your scores to drop. Also, failing to monitor your credit reports leaves you vulnerable to credit errors as well as to the possibility of identity theft, both of which can cause your scores to drop. Get in the habit of checking your three credit reports annually. The three major repositories, Experian, Transunion, and Equifax, each offer one free access to your credit reports per year.
Planning, the right way
Sound financial planning can really ease the transition into retirement. A Certified Financial Planner (CFP®) can help you with your plans for all that you want to enjoy in retirement. At Blankinship & Foster, we offer comprehensive financial planning services for San Diegans as well as investment management.
Our Wealth Management service integrates financial planning and investment management. We will help you to make smart decisions when it comes to your investments, developing a plan to maximize the amount of money you’ll have in retirement as well as providing proactive financial guidance as you transition to retirement. If you have concerns about your use of debt in retirement and your credit scores, we can provide answers on how to improve them.
Contact us to learn more about our services.