Retirement means relief from many daily concerns, ranging from the commute to the 9-to-5 grind. But you know that just because you move into the next chapter of your life doesn't mean you give up all your worries, and it doesn't even mean you give up all the obligations that come with life. Whether you're still living at home and just considering downsizing or you've already made the move to an assisted living community, one thing seniors still need to manage is their credit score and history.
Good credit lets lenders and others know that you have a history of handling money responsibly, which means you're more likely to pay your bills on time. As a result, lenders are more likely to approve you for credit cards or loans. But if you're done with driving or you don't plan on buying another car and you're selling your home to move into an assisted living community, does any of that really matter?
The answer is yes. Here are just a few other reasons seniors should work to maintain their credit score (or rebuild it if they took a financial hit in the resent past).
Retirement doesn't mean you stop buying things or shopping, and a trustworthy credit card can be super helpful with that. That's especially true if you do any shopping online. Credit cards tend to have better fraud prevention and protection measures than the debit card linked to your bank account. And some credit cards let you sign up for a free service that masks your credit card number when you shop online by assigning a temporary number for every purchase. That makes it much less likely your account can be stolen when you buy a fun treat for yourself or your grand kids online. But to get the best terms on a credit card, you do need good credit.
Your credit could impact your living options. Not all independent and assisted living community costs are covered by insurance or Medicare and Medicaid. Since you might have to pay out of pocket for some services, assisted living community management may want to see that you have the means for making those payments and that your credit history indicates you'll do so in a timely manner. This is also true if you decide to buy a new home or move into a condo or apartment.
Credit can play a role in whether or not you can get services. Automobile insurance companies sometimes check credit and base premiums in part on your score, for example.
If you're not ready for full retirement and want to apply for part-time work, be aware that some companies include a credit check in their background check procedures. That's especially true if you'll be applying for a job that involves handling money.
Many seniors make the mistake of ignoring their credit reports. They aren't taking out new loans and they always pay their bills on time, so they don't expect anything negative to mess with their score.
That's unfortunately not true. According to the Federal Trade Commission, around 20% of people have an error on their credit reports. Inaccurate information might be the result of a typo or other clerical mistake. But it could also indicate that someone is using your identity to apply for credit and running up unpaid bills in your name.
Seniors should get a free copy of their credit reports to ensure that all the information on them is valid. Federal law actually gives you the right to request a free copy of your report every 12 months from each of the credit bureaus. The three main credit bureaus, which are Equifax, TransUnion and Experian, partnered to create a website to make this easy to do. You can request your reports at AnnualCreditReport.com.
The Fair Credit Reporting Act protects your right as a consumer to have an accurate and fair credit report. So, if you find any errors on your report, you can request that the credit bureau who issued it investigate. You can do so by calling the bureau or reporting issues online, but most experts recommend mailing a certified letter with your request for documentation purposes.
Simply write a letter that identifies the inaccurate information by account number and creditor. You might want to include a copy of your credit report where you have highlighted or circled the information. Then, explain why you feel that the information is inaccurate. Include documentation, such as a canceled check showing you paid a bill, if you have it. End your letter by requesting that the credit bureau remove or correct the information.
The credit bureau has a legal obligation to investigate the matter within 30 days after receiving your complaint. They must also inform you of the outcome of that investigation and what actions they took.
Good credit may be something you worked hard for all your life, or it may be something you're just working on. Either way, you're never too old to keep an eye on your credit. Continue to use credit to maintain your credit history and get your free credit reports every year to ensure there aren't any problems that need to be addressed.
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