Throughout your adult years, maintaining a healthy credit score is very important for obtaining the best rates for a mortgage, car loans and managing credit card debt. As Baby Boomers enter retirement, big ticket items might be behind you, but it is still important to keep your credit score in good standing. Even though you are about to retire, your credit rating shouldn’t.
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A new TransUnion survey asked 1,037 non-retired baby boomers how important they believe their credit is at various life stages. “Despite the misperception that credit loses importance later in life, the fact remains that your credit score is a vital financial tool at every age,” said Ken Chaplin, senior vice president for TransUnion (TRU). Chapin discussed with FOXBusiness.com these simple steps for Baby Boomers to take to maintain a healthy credit score.
Boomer: What is the importance of credit scores to baby boomers for financial obligations in retirement?
Chaplin: People often assume their credit score isn’t important in retirement. In fact, a recent TransUnion survey found just that, with only 56% of the surveyed boomers saying their credit will be important after the age of seventy. You can see where the misconception comes from – most retirees have likely paid off their house, car and any other major loans. But what people don’t think about are other loans they may need access to credit for, such as long-term care or helping out a child or grandchild by co-signing a loan.
Boomer: What steps can pre-retirees take to establish and maintain good credit in retirement?
Chaplin: Two of the main components of a credit score are the credit utilization ratio, which measures how much available credit you’re using out of your credit limit, and payment history, including whether you pay your bills in full and on time each month. These components are important no matter your age.
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For pre-retirees in particular, there are a few other guidelines to keep in mind. One of the most important tips is to stay credit active through responsible, regular credit use. I recommend using a card for a small, manageable monthly expense such as groceries or gas. This way, you can stay credit active and maintain the score you worked to build throughout life. It’s also important to note that if a credit card closes due to inactivity, it limits your available credit limit and can affect your credit score.
Boomer: Since most retirees are past the point of making major purchases what should they be using credit cards for?
Chaplin: Credit cards should be used for small, manageable charges such as groceries or gas. As long as you pay off your full card balance on time each month, and don’t rack up charges up to your credit limit, your credit score will stay intact with small, regular use.
Boomer: How can boomers prevent credit fraud and identity theft?
Chaplin: Baby boomers, like all other generations, should be vigilant when monitoring for credit fraud and identity theft. Beyond regularly checking your credit report, you should also be mindful of any unexpected junk mail offers you receive as it may be an indicator your identity has been compromised. Another way to prevent fraud is through Credit Lock. It’s a tool that locks your TransUnion credit and prevents unauthorized access. The best part? You can access it from TransUnion’s mobile app or website, so it’s easy to manage your credit with a simple click or swipe.