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While intuition might tell you to stop using credit in retirement when you no longer have a steady stream of income, that may not necessarily be the best idea. Sure, you may not be applying for a mortgage in retirement, but there are still plenty of other reasons why you might need a decent credit score—applying for a car loan, obtaining a low-interest credit card or even moving into a senior living facility, for example. Shunning your credit score when you reach retirement could leave you limited in doing certain things that you would like to do. You can still continue to build credit in retirement, which involves maintaining the same credit-building habits you have always upheld.

Looking for ways to build credit in retirement? Here are a few suggestions.

  • Use your existing credit cards. Instead of paying for items using your debit card or cash, make small, regular purchases on the credit cards you already have instead. Using your credit cards and paying off your balances each month will help you to build credit in retirement. In addition, some credit cards offer points simply for using them, which you can redeem for credits toward hotels, airfare, Amazon purchases and other things, depending on the type of credit card you have.
  • Pay your credit cards on time. Paying your credit card balances is one thing, but paying them on time is critical to your credit score. In fact, your payment history makes up 35 percent of your credit score—the largest impact any single factor has on it. Set up automatic payments, or schedule alerts that remind you that it’s time to pay. Whatever you do, pay your balances on time to avoid a blow to your credit score.
  • Keep unused accounts open. Another way to build credit in retirement is to keep unused credit cards open. Having credit cards open, even if you don’t use them, helps in terms of the credit utilization ratio. The ratio, which accounts for 30 percent of your credit score, measures your credit card balances against your total available credit limits. You don’t want to use too much of your available credit, but you do want to find a modest balance between the credit at your disposal and the credit you are utilizing.
  • Open a secured credit card account. A secured credit card does not require you to have a credit score to qualify, so this could benefit someone who has already closed all of his or her credit accounts. With a secured credit card, the line of credit is based on the amount of money you deposit into an account that you hold with the financial institution that issued the card. For example, if you deposit $2,000 into an account, you will then be able to charge up to $2,000 on your secured credit card. Using your secured credit card and paying off the charges on time will improve your credit score.

Make it a point to build credit in retirement to make sure you don’t run into any barriers that prevent you from leading the lifestyle that you’ve worked hard to achieve!

Another way to guarantee your ideal lifestyle in retirement is to make sure that you have the money to fund it. At Ty J. Young Inc., our qualified financial advisors help our clients every day to secure their retirement income so that they will not have to worry about how they will pay for their retirements. Give us a call today at 877-912-1919 to learn more!

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Posts from the Ty J. Young Inc. team of advisors and leaders.


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