Cortburg Speaks Retirement

Why Your Credit Score Matters in Retirement

• Miguel Gonzalez, MBA, AIF®, CPFA®, CRC® • Season 2024 • Episode 178

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Cortburg Speaks Retirement - episode #178: Why Your Credit Score Matters in Retirement

Discover why your credit score is your retirement lifeline with Miguel Gonzalez, Certified Retirement Counselor. From unlocking better loan rates to seizing new opportunities, learn how a stellar credit score can transform your retirement journey! 

About Cortburg Retirement Advisors, Inc. 

Cortburg Retirement Advisors is a full-service, boutique financial planning firm - helping guide clients through turbulent and calm economies. Their goal is to help grow, protect, and preserve their assets from their first job through retirement. Cortburg’s “all in one house” capabilities mean that their experienced team can help with all financial needs - wealth management, estate and tax planning, group retirement, employee benefits, insurance, and retirement planning.    

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Welcome to Cortburg Speaks Retirement Podcast
with Miguel Gonzalez, MBA, AIF®, CPFA®, CRC®

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Welcome to Cortburg Speaks Retirement

An audio podcast about investing in the stock market, financial planning, money management and retirement planning.  Each Wednesday, we help investors at all stages of life learn how to potentially grow and preserve their money from first job through retirement.

Now here is your host, Miguel Gonzalez.

 HOST

Good morning and welcome to the CORTBURG SPEAKS RETIREMENT audio podcast.   

On this week’s audio podcast, we’ll talk about why credit scores matter in retirement.

Regardless of the stage of life, your credit score is an essential component of your financial health when you're in retirement. A consistently strong credit score can pave the way for greater confidence, easy loan access, and lower interest rates. Many retirees overlook the importance of maintaining a suitable credit score after they stop working or that credit scores lose relevance in retirement. Yet, nothing could be further from the truth. Here's a detailed look at why your credit score matters in retirement.

To Maintain Your Ability to Seek Credit

Retirement does not equate to financial inactivity. Even though you may no longer earn a regular paycheck, you may still engage in financial transactions requiring a credit check. For instance, if you plan to refinance your mortgage to a lower rate, lenders may consider your credit score part of the qualification process. If your score is low, you might be denied the mortgage or offered a higher interest rate mortgage.

To Find Housing

In addition, retirees often consider downsizing their homes, moving to senior living communities, or relocating to different states or countries. Any of these scenarios might necessitate applying for a new mortgage, a process that, once again, requires a solid credit score. Additionally, vacation home landlords often conduct credit checks before renting their property. A poor credit score can limit your options or cause you to lose out on your preferred vacation destination property.

Money for emergencies

Another reason your credit score matters in retirement is the possibility of unexpected expenses. Life is inherently unpredictable, and even in retirement, unforeseen costs can arise. These costs could be due to health complications, housing repairs, or helping a family member financially. In line with these circumstances, having good credit can make borrowing money more accessible.

New Opportunities

Retirees may also want to explore new ventures, like starting a business. Credit scores significantly impact the credit terms under which one can borrow capital to launch a business. An excellent credit score can make acquiring a loan less costly and more accessible. On the contrary, a low credit score could lead to onerous loan terms or a loan denial.

Suitable Insurance Rates

Furthermore, some insurance companies use credit-based insurance scores to determine risk factors and premiums for auto and homeowner's insurance policies. A poor credit score might cause retirees to pay a higher premium or, worse still, reject their policy application outright.

Tip to Maintain Good Credit

A good credit score is essential to your overall financial health. Lenders, landlords, utility companies, and insurance companies use credit scores to evaluate your reliability. Here are some tips retirees can use to help maintain good credit.

Tip #1- Pay bills on time.

The first and most significant tip for maintaining good credit is ensuring your bills are paid on time. Delayed or missed payments can negatively affect your credit score.

Tip #2- Maintain low or no credit card balances.

The proverb "the less, the better" holds significance regarding credit card balances. Keeping your credit card balances low and not revolving is essential, and a lower percentage of credit use (below 30%) is positive. Maxing out your credit cards or maintaining high balances can negatively impact your credit.

Tip #3- Open new credit accounts only as needed.

While having a mix of credit types – such as credit cards, car loans, or mortgages – can help your credit score, it's important not to open too many accounts in a short period.

Tip #4- Regularly check your credit reports.

Proactive credit report monitoring is vital, especially regarding credit scores. Regular credit report checks are instrumental in maintaining good credit. It helps to promptly identify any inaccuracies or fraud that could harm your credit.

Tip #5- Keep old credit accounts open.

The length of your credit history is another factor influencing your credit score. If you close an old credit account, you shorten your credit history, which could hurt your score.

Tip #6- Negotiate with creditors if necessary.

If you've missed payments and your credit score has taken a negative turn, contact your creditors and negotiate to remove the negative information.

Tip #7- Diversify your credit.

Having a diversity of credit types, such as a mix of installment loans, retail accounts, credit cards, and mortgage loans – can positively impact your credit score. Credit diversity demonstrates to potential creditors that you can responsibly handle different types of credit.

Tip #8- Seek professional help.

If you are overwhelmed with managing credit or have already slipped into a bad credit score, seeking professional help could be appropriate. Credit counseling agencies can provide invaluable assistance in rebuilding your credit score. Your financial professional can also be a source of help in providing recommendations based on your situation.

In conclusion, maintaining a suitable credit score is indispensable in your financial life, even throughout retirement. Retirees must focus on maintaining an excellent credit score to provide them with financial independence in their golden years.

Make sure to visit our website, www.CortburgRetirement.com. Our site is filled with educational videos, eBooks, publications, and financial calculators designed to help you learn more about your finances.  As you search our site, send us a note regarding any questions you may have about any particular investment concepts or products. We will get back to you quickly with a thoughtful answer.

This is Miguel Gonzalez, Certified Retirement Counselor (CRC) and Managing Partner, with Cortburg Retirement Advisors signing off for this week’s educational podcast.  

 

DISCLOSURES  

Opinions expressed are subject to change without notice and are not intended as investment advice or a solicitation for the purchase or sale of any security. Please consult your financial professional before making any investment decision. 

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

CRC conferred by The International Foundation for Retirement Education.

Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through Private Advisor Group, LLC, a registered investment advisor.  

Private Advisor Group, LLC and Cortburg Retirement Advisors, Inc. are separate entities from LPL Financial.

Investing involves risk including possible loss of principal.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by Fresh Finance

Contributor

Miguel Gonzalez, MBA, AIF®, CPFA®, PPC®, CRC®

Host