3 Reasons Seniors Still Need High Credit Scores

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Just because you’re retired doesn’t mean you no longer need credit. Here’s why your credit score still matters as a senior. [[{“value”:”

When you become a retiree, a lot changes about your personal finances. But what doesn’t change is the need for a good credit score.

Hard as it may be to believe, your credit score is still going to matter very much, even as you get older. Here are a few key reasons why you still need to care about this three-digit number after leaving the workforce and starting to live the rest of your life without an employer to answer to.

1. Seniors still need auto insurance

As you get older, you’re still going to need auto insurance. Unfortunately, once you reach about age 75, policies start to get more expensive because seniors are statistically the riskiest group to insure, other than very young drivers.

If you don’t have good credit, auto insurance premiums — which are already likely to climb — are going to be even higher. In fact, while the average car insurance premium is $3,017, drivers with excellent credit pay an average of $1,947 and drivers with poor credit pay $4,145 on average. Credit score affects auto insurance premiums because drivers with lower scores are seen as presenting a higher accident risk based on statistics insurers collect.

You don’t want to needlessly increase your auto insurance costs, so it’s best to try to maintain as high of a credit score as possible throughout the entirety of your life — even in your later years.

2. Seniors still need a place to live

You’re still going to need a home as a senior — and your credit can play a role in where you’re allowed to go. Say, for example, you decide to downsize by selling your family home and moving into an apartment. Your would-be landlord is going to check your credit and you may not be approved for your preferred place if you have a low score.

Now, if you’re a homeowner and plan to stay one, your credit could still be important to you as well. Close to 50% of homeowners between 64 and 79 still have a mortgage, and if you have one, you may want to refinance at some point to take advantage of a lower rate. Or you may want to downsize to a smaller home, but still need a loan to afford it. Your credit score plays a crucial role in determining if you can get a mortgage as a retiree and what rate you’ll pay.

You don’t want to be limited in your housing options because of low credit, so keep working on earning and maintaining a solid credit score.

3. Seniors may still need car loans

Auto debt per capita among seniors 70 and older is on the rise, increasing 73% between 2007 and 2017. As people live longer and remain independent longer, many more retirees end up needing to buy vehicles — often because the cars they retire with wear out before they do.

If you don’t want to just take a huge amount of money out of your retirement accounts, you may need an auto loan in order to be able to buy a car at an affordable price. And while there are bad credit auto loans out there, seniors with good credit tend to be able to have more choice of lenders and to qualify for lower rates.

The reality is, your credit score impacts almost every aspect of your budget and overall financial life — and you’ll keep having both in retirement. So pay your bills on time, avoid maxing out your credit cards, and maintain a good mix of credit so you can keep a good score that lets you do more of the things you want as a retiree.

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