credit & debt

4 Good Reasons for Retirees to Maintain Strong Credit

A good credit score may come in handy when you — and others — need it most.

Most people try to be debt-free by the time they retire. As you start to draw down your savings, you may find you’re no longer using credit at all. Almost half of baby boomers say that they believe their credit score will be less important after age 70, according to a recent survey from credit reporting agency TransUnion.

But even if you don’t expect to borrow money, you have good reasons to maintain a strong credit profile. Here are some:

1. Helping the kids

You may want to help your children or grandchildren fund college or purchase a first home by co-signing a loan (just be aware that you’re on the hook if the primary borrower defaults).

2. Downsizing

If you decide to downsize, good credit will help you snag a low mortgage interest rate or pass muster for a rental.

3. If the unthinkable happens...

Assisted-living facilities and nursing homes may consider your credit report and score to determine your eligibility to become a resident.

4. Getting the best credit cards

Healthy credit will maintain your ability to qualify for top credit cards (see The Best Rewards Credit Cards).

“One of the simplest ways to keep your credit alive and well is to have some cards and use them sparingly,” says Adam Levin, chairman and cofounder of Credit.com and Identity Theft 911. You could charge, say, groceries and gas to ensure that your cards remain active and pay off the balances monthly to avoid interest.

If you’d like to trim a large collection of cards, close those with annual fees or the lowest credit limits, and hang on to those with the highest limits, says Ken Chaplin, senior vice president for TransUnion. That will help keep the balance on your cards relative to their limits (called credit utilization) low. And keep the cards you’ve had the longest to show lenders a history of responsible spending.

Most Popular

5 Beaten-Down Stocks to Buy on the Dip
stocks to buy

5 Beaten-Down Stocks to Buy on the Dip

The market has delivered some nauseating volatility of late. The good news? That has teed up a few great stocks to buy at a discount.
September 27, 2021
10 Best Stocks for Rising Interest Rates
stocks

10 Best Stocks for Rising Interest Rates

The 10-year Treasury yield is hovering near its highest level in months. Here are 10 of the best stocks to buy in a rising interest-rate environment.
September 30, 2021
13 States That Tax Social Security Benefits
social security

13 States That Tax Social Security Benefits

You may have dreamed of a tax-free retirement, but if you live in these 13 states, your Social Security benefits are subject to a state tax. That's on…
October 4, 2021

Recommended

6 Things You Can Do Right Now to Ensure Your Money Will Last in Retirement
retirement planning

6 Things You Can Do Right Now to Ensure Your Money Will Last in Retirement

Your retirement plan needs to take a holistic approach. Because there are so many decisions to make, it’s easy to get lost in the weeds. Follow these …
October 15, 2021
10 Least Tax-Friendly States for Retirees
retirement

10 Least Tax-Friendly States for Retirees

When it comes to state and local taxes, retirees in these states are likely to pay more than retirees in other states.
October 14, 2021
Social Security Earnings Tests: 5 Things You Must Know
social security

Social Security Earnings Tests: 5 Things You Must Know

If you’re still working and claim Social Security early, your benefits could be reduced, at least temporarily.
October 13, 2021
4 Ways to Earn More From Your Rainy Day Fund
savings

4 Ways to Earn More From Your Rainy Day Fund

You should set aside enough money to cover three to six months of living expenses in case of an emergency. But sticking this cash in a savings account…
October 12, 2021