(TNS)—Whether or not you’re one of the 147 million consumers affected by the 2017 Equifax data breach—which resulted in a Federal Trade Commission settlement of up to $700 million—retirees need to stay vigilant about their credit profiles, experts say.
That may seem counterintuitive, particularly to those who pay off their homes, cars and other debt by the time retirement is on the horizon. Retirement itself, in fact, doesn’t hurt a credit score directly.
But the absence of credit can, indeed, torpedo a pristine credit score because payment history over the past two years—or the lack thereof—is the biggest determinant of a credit score. The length of credit history, where most retirees can really shine, carries less than half the weight of the overall payment record.
And a credit score dive can be trouble, even for retirees.
“It’s an important tool to have available and to protect,” said Rod Griffin, director of Public Education for Experian, one of the three major credit-reporting agencies.
A later-life move, purchases of items like cars, cell phones or insurance, even an application for a reverse mortgage may require a strong credit score. What to do?
Consider these five moves:
Leverage the positive. Retirees who’ve experienced a dip in their credit scores could be ideal candidates for Experian Boost, a program that lets consumers give the agency a look into their checking accounts to verify positive track records on paying utility and cell phone bills.
Two-thirds of the customers who try the Boost program see a rise in their scores, Griffin said, with an average increase of 12 points. Note that it can’t negate bad credit behavior; it simply can help consumers with thin credit records beef up their profiles.
“When you think about people heading into retirement, if they are adding recurring on-time utility payments, that could help maintain activity” on their reports, he said. The program is most helpful for people who started with scores below 680. (Scores range from 300 to 850.)
Embrace the freeze. If you’re retired and don’t plan to move or buy a car in the near term, this may be a good time to put a freeze on your credit with the three main bureaus, Equifax, TransUnion and Experian. If you do this, creditors can’t access your information until you remove the freeze with a PIN number. So, keep that number in a safe place. For a fee, the bureaus offer a credit lock, which can be removed without a PIN, but may not carry all the protections of a true freeze.
Clean up. A lot of credit experts tell consumers never to close credit accounts because it can hurt scores, but Griffin says any dip is typically short-lived.
“If you close an account your scores will dip, but they usually recover within two or three months,” he said. If you’re not planning to buy a house or a car in the next six months, cleaning up orphan accounts may be a good idea now, he said.
Be ready. If you’re thinking about a reverse mortgage, where a lender provides funds to homeowners 62 and older that are tied to home equity, be aware that your credit history is now part of the equation. Since 2015, these lenders have been required to assess whether a borrower has the ability to continue making home improvements and tax payments on the property, and credit reports are a key part of the equation.
Check for a windfall. If you want to check your potential eligibility to claim part of the Equifax settlement, go here: https://eligibility.equifaxbreachsettlement.com/en/eligibility. To file a claim, go here: https://www.equifaxbreachsettlement.com/file-a-claim.
“You should always be diligent about managing your credit history,” Griffin said. “It can affect a wide range of financial transactions and you want it to be there to work for you when it is needed.”
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