Don't Let Your Credit Suffer in Retirement

Maintain Good Credit in Retirement

Elderly couple talking on a couch

If you worked hard to build a strong credit score, don't let it unravel once you retire. Though you may not be in the market for an auto loan or a mortgage (and it's probably not wise to take on new debt when you are no longer drawing a salary), a good credit score will continue to serve you well no matter your age.

First, you never know when you might need to borrow, so a good credit score can help you keep your options open. And existing lines of credit, such as credit cards, can readjust your interest rate based on deteriorating credit.

But you may need to adopt a different strategy for maintaining your credit score in retirement than you did while you were working. Use these ideas to keep your credit on track.

Whip out the plastic

At 35 percent, payment history is the biggest component that goes into making up your credit score.1 Continuing to demonstrate good payment habits can keep this part of your credit score up. Make sure to use your credit cards on a regular basis — and pay the bills off promptly.

Don't use all of your available credit

Your credit score is also affected by your credit utilization rate, which is how much of your available credit you are currently using. The lower the rate, the better it is for your score. If you're using more than 30 percent of your available credit, consider paying down some debt and don't pile on more.2

Watch for ID theft

There's no surer way to suffer a poor credit score than to fall victim to identify theft. Sign up for a credit monitoring service — often available through a credit card company at no charge — to alert you to suspicious activity.3



1http://www.myfico.com/credit-education/whats-in-your-credit-score/
2http://www.nerdwallet.com/blog/finance/30-percent-credit-utilization-ratio-rule/
3http://www.consumerfinance.gov/askcfpb/1369/what-identity-monitoring-or-identity-theft-protection-service.html/

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