The FICO score is of major importance for persons in their prime working years. Persons with really good FICOs qualify for: preferential mortgage rates, to get better rates on auto loans, get the best credit card deals, get the lowest rates for their home and auto insurance, can get business loans, and even get preferential treatment on job offers. Persons who can maintain high FICO scores can save tens of thousands of dollars (or more) over their working lives. But once you retire does your credit score still matter?
Yes it does. The FICO is still used to calculate your home and auto insurance. Even if you are debt free, your home and cars are paid off, and have fully funded your retirement and are living off investment income your insurance company is going to run your credit when they set your insurance renewal rates. The FICO is even more important if you want to change insurance carriers. If you have a poor FICO score you will typically pay more for insurance.
Most retirees are on fixed incomes. They get paid once (or twice) a month and that has to last until the next monthly check rolls around. Some months unexpected expenses like a really cold January, a new hearing aid, a new transmission, or storm damage can arise. For this reason many seniors like to carry a credit card. Seniors with high FICO scores get the best deals on their credit cards, while seniors with poor scores either can’t qualify for a card at all or they get a card with a rate that is so high that they would be better off with out one.
Good credit is a business tool. Many seniors find that retirement can provide them with business opportunities. Many seniors start businesses.
For some their second career does not come with any up front costs. For others, they find that they need or can use business loans or home equity loans to fund their business enterprises. Having good credit gives those seniors more options to pursue those opportunities.
Retirees with good credit get the best deals on mortgages. We all would like to retire with a paid off mortgage; but life often does not work out that way. A recent study by Strategic Business Insights showed that 40% of seniors age 60 to 64 were still paying on their home mortgage. With interest rates at historic lows, don’t empty your retirement savings to pay off a mortgage with a low cost of service. Seniors with high FICO scores can refinance their homes at historically low rates.
Because your credit score still matters…..no matter how old or how young you are, we recommend that everyone continue to monitor your credit scores. Many seniors do not keep track of how their credit score is changing and as a result many identity thieves intentionally target seniors. We recommend that everyone routinely check their credit reports with the three major agencies and check those reports for accuracy.
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