Credit Score Matters at Retirement

Wealth preservation is often the top priority for people who have retired or approaching retirement. You might have worked to build a healthy score during your employment years by properly managing your finances. Similarly, you need to maintain a healthy score to make your life after retirement stress-free and enjoyable. It is important to do so because it will help you to easily avail credit from the banks or NBFCs to meet any unforeseen situation post-retirement which is not possible without having a reliable credit rating. Here are some of the reasons why having a good credit rating is important during your retirement.

Reasons to Maintain High Credit Score during Retirement

Following are the reasons that you need to maintain your credit rating even after your retirement:

  • Lower rates on Insurance-

    If you have maintained a good score during your employment years, it will help you to get low rates on your insurance premium. It is because you will be looked upon as a more responsible person when it comes to handling risk.

  • You have the option to refinance mortgage-

    A good score will make you eligible to easily refinance your mortgage. When you run out of money, in that case, you can avail the cash through the cash-out reference.

  • When you change your residence location-

    Most of the people often prefer to retire in their hometown or at some peaceful place. In this case, your healthy score will help you to easily get the approval for a home loan from the lender to build your house post-retirement.

  • You can save while spending-

    You will be spending the money you have saved for your retirement for a long time. If you don't want to spend your savings, in that case, you can apply for a reward credit card which will let you enjoy cashback and rewards on purchases and grocery shopping. To avail the best rewards credit card, you will need a high score. Also, if you make your credit card payments in full every month, you will not be subjected to any interest rate charges.

  • You can avail a loan at the time of emergency-

    If your family member or you are facing any financial trouble and you don't have an emergency fund, you will have to curtail your savings. But if you have a good credit score, you can take a loan or line of credit to meet your immediate requirements.

  • You can follow your passion and start a new business-

    Retirement may not necessarily be a boring phase of your life. With adequate money in your hand, one can pursue the careers and hobbies they could not during their time of employment. Even you can start a small business of your own without having to compromise on your savings. So, when you have a reliable credit score, you can easily avail credit to meet the costs attached to your small start-up.

Bottom Line

It's easy to maintain a good credit score during your phase of retirement, all you need to do is be proactive and monitor your credit usage from time to time. Be consistent with paying all your credit card monthly bills and loan EMIs on time to keep up with your score. Also, you would need to keep a track of your credit report and score so that you don't fall victim to the identity theft.