What Happens to My Credit When I Retire?

Life Stages
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2
 Min read
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February 26, 2021

Taking care of your credit is important throughout life, including when you retire. Retirement is meant to be a peaceful time of financial freedom, but if you don’t have good credit, you may experience challenges that you’re not prepared to handle.

Retiring from work doesn’t mean retiring from being financially responsible. At some point, you may need to borrow money to cover unexpected expenses, so it’s important to continue to be proactive about your credit.

Retirement and Your Credit Score

Your credit report doesn’t show your employment status or income, so retiring has no direct impact on your credit report or credit score. What can affect your credit score is how you manage your finances after you retire.

Once you’ve retired, changes to your lifestyle may affect the credit score you’ve worked so hard to maintain while you were working. If your expenses are exactly the same but your income has decreased, you may end up borrowing money you can’t pay back just to make ends meet. You may also find that your ability to borrow money has declined because of your reduced income compared to your debt. The key is to plan ahead before you retire.

Steps to Take Before and After Retiring

Pay off as much debt as you can before you retire. The fewer bills that are hanging over your head, the more you can approach retirement without worrying about your finances. You may be tempted to close credit card accounts but it’s a good idea to keep them open to cover unexpected emergencies. It’s also important to avoid using them unless there is an emergency. Another reason to keep them open is that closing accounts with a long history can lower your credit score.

Both before and after retirement, always pay your bills on time. Paying just one bill more than 30 days past due can quickly lower your score. Keep your credit utilization low. The goal is to keep your balances at less than 30 percent of the amount available.

Why Credit Still Matters After Retirement

It may be tempting to think that once you’ve retired, both work and worrying about your credit are in the past. You may not realize that unexpected expenses may still be ahead such as a vehicle that breaks down or medical expenses.

Without a good credit score, you may not be able to borrow money if you need it, or you may end up with higher interest rates. Your credit score may also be considered when insurance companies determine your premiums.

Enjoy Your Retirement

To help make your retirement enjoyable, take the time to pay attention to what’s on your credit report and pursue credit repair if anything is inaccurate. Errors on credit reports including identity theft are more common than you may think. By remaining vigilant about your spending habits and making sure your credit report is accurate, you can relax and enjoy your retirement.

Dovly can help you stay on top of your credit. Our automated system can find and fix errors on your credit report, which can help to contribute to your peace of mind during retirement. Take advantage of what Dovly has to offer today.


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