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Senior Living Blog

Are Credit Scores Important for Seniors?

Posted by Village Green Team on Jul 18, 2018 11:29:02 AM

When you think of a credit score and having good credit, you probably picture a young adult just starting out on their own. It may be someone who wants to buy a new car or a couple who just got married and want to buy a house. You may think seniors don't need a credit scores because they already have a home and a savings account, but good credit is also crucial for seniors.

Are Credit Scores Important for Seniors

Seniors Still Need Credit

At some point, most seniors will find they need a good credit score. Right now, you may own your home, but you may choose to sell it and rent a place in a senior retirement community. The owner will likely require a background check which may include a credit report.

You’ll need to create accounts for the utilities, which may also require a credit check. It can be difficult to get approved or you may need to have a security deposit unless you have good credit.

If you need to make other large purchases or even to get major work done like home repairs that would require you to make purchases, credit could be important. Many companies run credit checks before extending credit of their own or creating payment arrangements.

Why Seniors May Not Have Credit

One question a lot of seniors have is “why wouldn’t I have credit at my age?” They bought a home and have been paying utilities for years. They may have a cell phone and even a credit card that they never use. It seems quite sensible to have no problem applying for accounts with their history.

The problem for many is their credit has expired. They purchased a home 10, 20 or even 30 years ago or longer. The last vehicle they purchased on credit was many years ago and they've been paying cash ever since. The senior may be frugal with their money, especially after retirement so they don’t use credit cards anymore.

The credit bureaus only keep good credit for up to 10 years. Any accounts older than that may have dropped off the credit report. So, even if you have had good credit in the past, it may not show anymore. Instead, if someone were to run a credit check, they would see you have no credit, which could hurt you as much as having bad credit.

Related Reading: Protecting Your Loved One Against Senior Scams

What Seniors Can Do to Build Credit

It’s never too late to start building new credit. You can get a secured credit card and use it for a few months. Pay it off each month and you’ll start building your new credit score. It will take about six months from the time you open a credit account before it will show up on your report.

Never take your credit for granted. Maintain it by using a credit card at least once a month. If you have already let your credit “expire”, you’ll need to work on rebuilding it. You never know when you might need to have good credit in the future.

 

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Tags: Financial Planning