Financial management is the topmost concern for people in or approaching retirement. You have likely worked to build a good bureau credit report and properly manage your finances for several years. Having a good credit score in retirement is important for many reasons. Thankfully, the actions you take before retirement to maintain a credit score are the same ones you will take after leaving the workforce.
Read on to discover why the AECB bureau credit report is important in retirement and how you can maintain it…
Why does AECB bureau credit report matter in retirement?
Many retirees assume once they retire that their borrowing days are over. However, this is far from the case for most retirees. Here are some of the most common ways a low credit score can affect your retirement:
It is common for credit companies to monitor credit scores for their existing clients. This helps them to adjust interest rates. If you have outstanding credit card debt, your credit card company may increase your interest rate if your credit score drops. The company also reserves the right to decrease your borrowing limit if your credit score declines significantly. In situations where your account gets flagged, they may even close your account. That is why it is important to maintain a high credit score to stay in favour with your credit card companies
Many retirees choose to move during retirement. This may mean having to put down a security deposit at a retirement community or a new condo. Most rental agencies will run a credit report to determine your eligibility to live in the community and assess your ability to pay your rent or bills on time. If your credit score isn’t favorable, your new community may either ask for a larger security deposit or reserve the right to turn you away. In addition to a housing situation, you may have to put a deposit down on other large purchases. This may include construction gear if you are building a new home, or something as small as a Wi-Fi router from your cable company. If you cannot prove good credit, you may be asked to put down a significantly larger deposit or be declined to rent the equipment in question.
Low insurance premiums
When insurance companies such as your auto or homeowner’s insurance providers evaluate potential customers, they take your credit score in to account. They may use information from your credit report to decide what your rate is or if they will offer you coverage. The lower your premiums, the more money you’ll have to spend during retirement. So, keep your premiums as low as possible by maintaining a good credit score in retirement.
How can you maintain your credit score in retirement?
To maintain or increase your credit in retirement, you should continue building the same financial habits you did while in the workforce. These habits include making your payments in full and on time, and various other positive habits. Here are a few steps that you can take to maintain a good credit report and score in retirement:
Pay your credit card bills on time and in full
Making on-time payments is a huge step in making sure you have a clean credit report. Even one late payment can cause your credit score to drop tens of points. If you miss a payment, make a delayed payment, or have your balance sent to a third-party collection agency, it can severely damage your score long-term. Additionally, if you declare bankruptcy, it can take over a decade to build your score back up. You may want to set reminders on your calendar to make monthly or bimonthly payments. Most credit card companies will accept payment over the phone and nearly every company accepts payment online. Make sure you stay organized and pay your balances in-full and on-time.
Keep a low credit outstanding balance
You may wonder how low you should keep your credit balances. The rule of thumb is to utilize less than 30% of the credit offered to you. For example, if your credit limit is AED 10,000, then you should never have a balance of more than AED 3,000. If you are worried about keeping a balance below 30%, there are two things you can do. First, you can keep it low by making more frequent payments so that your balance does not exceed 30% of your line of credit. Second, you can call your credit card company and see if they can increase your credit limit. This is only recommended if you are disciplined about your spending and can pay off the balance in full.
Review your AECB bureau credit report
While reviewing your credit report won’t impact the score, being aware of what’s on your report is beneficial for several reasons. First, when you know what is on your score, you will also be able to spot any potential discrepancies such as fraudulent activity. Additionally, by reviewing your score, you are keeping your financial health top of mind. This will make it easier to make financial decisions that may impact your credit score.
Keep accounts with long histories open
The age of your accounts is a factor in measuring your credit score. Even if you are not using a credit card, keep it open if it does not have a fee associated with it. This will increase the average age of your accounts and can help boost your credit score. This is especially true if you have a history of on-time payments with the accounts.
Maintain your active accounts
While you should keep accounts open that you don’t need, it may be wise to keep them active. This may mean making a small purchase on them occasionally. Active accounts tend to help raise credit scores a bit more than cards that are not used. You may want to buy a tank of gas each month or put a subscription such as Netflix on the card to keep it active.