Buying a home, leasing a car, and refinancing a student loan—all of these activities take credit scores into account. But since most of these investments seem geared toward young adults rather than seniors, you might assume credit scores lose value past a certain age. Unfortunately, that kind of thinking can hurt you.
“While seniors who have no debt, do not carry a credit card balance, and have plenty of savings may have to worry less about credit reports and scores, there still are reasons why they may come into play,” says Freddie Huynh, Freedom Financial Network’s vice president of credit risk analytics.
Here, Huynh shares five reasons why credit reports and scores are still important for retirees as well as those approaching retirement.
1. Credit scores affect employment.
Just because you’re retired from your primary career doesn’t mean you won’t work again. “Many retirees, and hopeful retirees, are finding that they will still need to work, or even find a new full-time or part-time job,” affirms Huynh. And, like it or not, your credit report could be a factor in whether you get hired. “Employers are allowed to check credit reports, and frequently do so for positions that require access to large amounts of money or sensitive information,” he adds.
2. Credit scores affect driving.
Even if you’re still in good shape to drive, your car may not have aged so well. In that case, you’ll need a safer set of wheels to get around. And, according to Huynh, credit reports and scores are considered by many auto insurance companies to determine your interest rate as well as your ability to lease a car.
3. Credit scores affect homeownership.
At this point in life, you may want to buy a smaller home so you have less space to clean and maintain. But unless you have the funds to purchase the property outright, you will need to apply for a mortgage. That’s where good credit comes in. “A good credit score can significantly impact your ability to borrow money, as well as the interest rate you will pay,” says Huynh.
4. Credit scores affect renting.
If homeownership has become too big a burden in your golden years, renting may be a more appropriate option. “Many seniors, when downsizing, sell their homes and prefer to rent,” explains Huynh. Of course, your credit report and score will absolutely affect your ability to do so.
5. Credit scores affect assisted living.
On the other hand, if you’re beginning to need assistance with activities of daily living, it may be time to consider moving to an assisted living or skilled nursing facility. And keep in mind that your financial health plays a significant role in your ability to pay for care. “Many people don’t realize that these facilities generally are not covered by Medicare—they require private payments,” says Huynh. “You need to fill out an application, and the facility can check your credit profile to determine your level of financial responsibility.”
Clearly, credit reports and scores are not just the province of college grads and young adults—they matter for seniors, too.
“A good credit score and good credit profile provide options for seniors to do more of what they want and need to do,” affirms Huynh. “For most people, credit reports and credit scores are important throughout life.”
CHIME IN: How has your credit score impacted your life as an older adult?