How Your Credit Score Can Affect Your Retirement

Most people strive to have a solid credit score in the upper 700s or low 800s most of their adult life. However, not everyone worries about his or her credit score come retirement. By the time most people retire, they have moved beyond the constant worry of everything being perfectly on time due to the misconception that credit scores do not matter after retirement. The truth is that credit scores are an imperative part of life from the time credit is started until the day we pass on. Here are a few examples of times where a good credit score will have benefits to you after retirement.

Credit Cards

Credit cards come in many different shapes and sizes, figuratively speaking. There are rewards cards, bonus cards, higher interest rate cards, lower interest rate cards, and many different variances in between. If you want to be able to apply for and use credit later in life, you need to start with a good credit rating. The higher your credit score, the lower your interest rates will be on your credit cards, and the more bonuses you will have access to. If you have very few credit cards prior to retirement, but you want to apply for more after you retire, you will need to have solid credit in order to make that happen. Credit card companies are more leery about giving credit to older individuals, as they are closer to passing away and not being able to repay their debts. Showing a solid history of paying your bills on time will go a long way when it comes to convincing a credit card company that you are worth the risk.

Buying a New Car

There will come a time when the car you are currently driving will need repairs. Some of those repairs may end up costing you more than the car is worth, making the purchase of a new car a sound decision. When this happens, you will want the lowest interest rate possible so that you don’t end up spending twice what the car is worth. Installment loans, like car loans, are more difficult to get when you are older, especially when you have less than perfect credit. The better your credit score is when you apply, the better offer you will get for the car you want or need.

Most Types of Insurance

There are many different types of insurance that require good credit to keep the costs down. You will end up paying higher premiums if you have bad credit for many types of life insurance, car insurance, homeowners insurance, and even renters insurance if you do not own your own home. The best way to keep the premiums at a minimal price is to have a long-standing history of on-time payments for all of your bills and utilities. Most lenders will also look at the fact if you have had other installment loans in your history, such as mortgage payments, to determine if you are worth the risk of lending to as well. The more on-time payments you have in your history, the more likely you are to be able to get the insurance you need at a price you can afford.

No matter what you end up needing to buy after you retire, the better credit you have, the less it will end up costing you in the long run. It is worth taking the time to monitor your credit and ensure that you start with sound financial choices from a young age. You should start positive spending habits young, and never allow your situation to stop them from being your normal routine.

Finances - 26 Sep, 2013 - No Comments