Your credit score is not something you should stop thinking about just because you are nearing retirement. If you ever need to access any form of credit or buy a new insurance policy, your credit score can come into play. The good news is that it is not difficult to maintain a good credit score during your retirement. To that end, here’s what you can do:
1. Continue using credit
When you use your credit card efficiently, it reflects positively on your credit score. So, even though you may have a fixed income during retirement, it’s best that you continue using your credit card and repay the balance in full at the end of every month.
2. Keep unused credit accounts open
Although you may not be using all your credit cards once you retire, you should, ideally, keep these accounts open. Closing old credit accounts increases your credit utilization ratio, which can negatively affect your credit score. Also, old credit accounts can contribute positively to your credit score. If you close your old accounts, you will essentially be bringing down your credit age, which, in turn, will affect your credit score.
3. Pay your bills on time
Missing your credit card bills or loan installments can cause a significant drop in your credit score. To avoid this, ensure that you keep making your payments on time. It’s best to either set up automatic payments or reminders to help you pay your bill within the due date.
4. Check your credit reports
You can access your credit report for free once a year from each of the three major credit bureaus. So, make sure to get a copy of your credit report and check for discrepancies. If you notice any inaccuracies, you should get them corrected right away.
5. Avoid co-signing or adding an authorized user to your credit account
Co-signing and adding authorized users to your credit accounts can make for a financial disaster if the person you are helping out defaults on their payments.
Lastly, always be wary of financial frauds and scams. Make sure to never reveal any details of your credit accounts to people, since this could negatively affect your financial standing and, in turn, your credit score.