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Why does Your Credit Score Matter at the Time of Your Retirement

Having no responsibility towards others and all the time to spare in the world during their retirement period is a dream for many. The retirement period is such a time when one does not have to worry about going to the office or showing up for meetings on time. In addition, during retirement, one aims to be able to do whatever they want and at their convenience. However, it is a known fact that a retired person tends to struggle with their finances as they are no longer earning the kind of income they did as a part of the workforce. This is one reason why an individual who is still a few years away from officially retiring must look into their credit score and credit reports at large and take the necessary steps to improve the same while they still have time. This article will essentially take you through the importance of a good credit score for a retired individual and what are the steps that an individual can take to ensure the same for the period when they bid the office life goodbye. Read on to know more.  

What you will find below is a list containing the various reasons why an individual must have a healthy credit score as well as a clean and discrepancy-free credit report. Let us take a look at them right away.

Reasons why Credit Scores Matter During Retirement

  • Higher credit scores can translate to lower insurance premium payments

What you probably did not know up until now is that the credit report of an individual also influences the insurance cover premium that he/she pays on a periodical basis. The way it works is that if an individual has a good credit score, they will be branded as someone who is more responsible towards themselves and good at being able to handle risks. The same will almost instantaneously create an image of a low risk person in the mind of the insurance company executive with regards to them. Hence, a person with a high credit score will be in the position to negotiate, or renegotiate, rather, the premium rates and insurance terms, provided they have a clean credit report to furnish.

  • Ability of refinancing house mortgage

A healthy credit report with a credit score that is considered to be ideal by leading lending institutions will also allow the retired person to be able to refinance their mortgage without any hassles.

  • Relocation process will become easier if a good credit score is in hand: 

Once an individual becomes a senior citizen, they might find the task of managing a big house that was once home to an entire family difficult. The responsibilities of managing a house comes upon the retired individual after their children have presumably moved out of the house in order to start a life of their own. In order to reduce a burden like that one, an individual can choose to move into a smaller house somewhere in the city itself or maybe even outside it. This could probably mean that the retired personnel may have to take up a personal loan with reasonable interest rates as well as a longer loan repayment tenure, which is why a good credit score and an overall healthy credit report will be of significance to them. Having a good credit score and a decent amount coming in as regular income from the likes of their pension payments and insurance policies, if any, can help a retired person secure a personal loan or even refinance their mortgage.

  • Spending and saving can be done simultaneously

If a retired individual has managed to keep their credit score within the range of 650 or above, he/she can save with the help of credit cards that the lending institutions can grant them on the basis of good credit scores and a good credit history. Credit Cards these days allow an individual to avail discounts, cashbacks and rewards for simply using them while shopping. Such a facility can prove to be extremely useful to an individual who plans on saving a little from the money that is coming to them at regular intervals.

  • A good credit score can help you take care of unforeseen events

At any given pointa car can break down or a house may end up needing repairing, which can definitely prove to be a burden on the shoulders of the retired individual, for whom finance is already a bit of an issue. This is where a good credit score can come to the rescue of the person, as it can help them secure enough credit to take care of such unanticipated events.

  • A good credit score can essentially help you live your life and fulfil your passion

Retirement is seen by most people as a chance to do whatever they have really loved but could never make time for due to the burden of responsibilities on them. They can even start a small business. In order to be able to do so, a good credit score is extremely important as it will help them receive credit for such activities. Therefore, when one has a good credit score and an overall clean-looking credit report, they can be assured of the fact that they will be able to indulge in the activities they have been wanting to participate in for long and/or meet the costs attached to their start-up.

It is, in fact, fairly easy to maintain a good credit score in your retirement. However, an individual will be required to proactively monitor their credit history and reports while they are drawing salaries. What you will find below is a list of ways in which you can ensure that you have a clean credit history and hopefully a more than ideal credit score down the road. Read on to know more.

Ways in Which you can Increase Your Credit Score

  1. Pay the loans off in a timely manner: If an individual makes their loan and credit part payments on or ahead of time, the same will begin to reflect in their credit reports soon. Honouring credit on time is one of those almost sure shot ways in which they can increase their credit score and improve their credit reports and their impact tends to be fairly significant
  2. Keep a tab on your credit scores: If you check your CIBIL scores and credit reports pertaining to you frequently, it will be taken as a sign of conscientious credit behavior, since information regarding such self-administered investigations is usually recorded by the credit agencies at the time of making them. Timely screening of your credit report can also help you catch any errors or inconsistencies. The same must be reported on an urgent basis if found.
  3. Maintain a healthy mix of unsecured and secured forms of credit: It is important for a borrower to ensure that they have a credit portfolio that contains both secured and collateral-free loans as a part of their borrowing history. Such an act is deemed to be an indication of creditworthiness by some of the most well-known financial minds of India. Ergo, it is indeed necessary for you to check for the same frequently.

You can always learn more about credit scores, their significance and check your CIBIL score as well on Finserv MARKETS.

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