By the time you retire, you have probably been building your credit score for decades. In fact, senior citizens tend to have the best credit scores of any generation, according to the credit reporting bureau Experian. But while this time in your life is meant for relaxation, that doesn’t mean that you can completely let down your guard regarding credit.
Good credit is important throughout your adult life, including in your later years. Here are four times when your credit record counts.
[See: 8 Ways to Maximize Your Credit Card Rewards.]
1. Downsizing or moving to a different location. Maybe you want to relocate to a warmer climate or an area that’s closer to family. Or you could decide to save money and housecleaning effort by downsizing to a smaller home. Unless you can pay cash for your new place, you will need to apply for a mortgage. The better your credit, the better chance you have of qualifying for the lowest mortgage rates.
Even if you decide to rent a property, whether it’s your primary residence or a vacation home, you will need good credit. Most landlords run credit checks to lower the risk that they end up with tenants who can’t pay on time every month.
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2. Getting the best credit card. For many older Americans, retirement is a time to travel. A good travel rewards credit card is a great tool for saving money on your dream vacation. You’ll earn points for your regular spending on the card (and often bonus points for travel expenses), which you can eventually cash in for free flights and hotel stays. Plus, most airline cards come with perks such as free checked bags, trip cancellation insurance and free rental car insurance.
A good credit score gives you access to top-tier rewards cards. Those premium programs can make a serious dent in the cost of frequent trips.
If you’re the type who likes to stick closer to home, cash back credit cards can help defray the cost of everyday expenses. As long as you pay off your balance in full every month and don’t spend more than you normally would just to earn points, you should come out ahead with a rewards card.
Plus, credit cards come with more consumer protections than debit cards. That can be especially important for older consumers, who are often targeted by fraudsters. Zero liability policies mean that you aren’t responsible for any fraudulent charges on your credit card, as long as you quickly report suspicious activity to your card issuer.
3. Embarking on a second career. For many seniors, retirement doesn’t mean leaving the workforce altogether. If you want to get a part-time job, switch careers or start a business, a bad or lapsed credit record could create hurdles. Some employers check credit reports for job applicants. So do small-business lenders and even some business suppliers. A strong credit history helps assure them that you are responsible.
[See: What to Do If You’ve Fallen (Way) Behind on Your Credit Card Payments.]
4. Entering assisted living and nursing home care. No one likes to think about it, but there may come a time when you need to move into a facility that provides access to medical care. Assisted living facilities and nursing homes are expensive, and they don’t take Medicare for long-term stays. Managers of these facilities will want to see that you can make timely payments for your care, and a good credit score helps convince them. A bad credit record could keep you from being approved to live there.
How to maintain your good credit score. It’s easy to let your credit record lapse if you don’t have any outstanding loans. One simple way to keep your record active is by regularly using a credit card and paying the bill on time every month, even if it’s just for a small expense such as a tank of gas or load of groceries. If you fail to use a card, the issuer will eventually deem it inactive and close the account, damaging your credit score.
It’s also important to continue checking your credit record to make sure that it doesn’t contain errors and that you haven’t been a victim of fraud. You can get a free copy of your credit reports from the three main credit bureaus once a year at AnnualCreditReport.com.
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4 Reasons Why Senior Citizens Still Need Good Credit originally appeared on usnews.com
