They Had Great Credit Scores. Then They Retired.

[question everything]

Cross posting from Personal Finance

https://www.democraticunderground.com/11214890

Even people with pristine records of on-time payments can expect their scores to slip after they stop working. While stopping work or living on a fixed income don’t ding your credit directly, scaling back one’s lifestyle in retirement or paying off old loans can affect a score, said Ethan Dornhelm, vice president of scores and analytics at FICO. Credit scores matter to millions of retirees even if they are less likely to apply for mortgages, loans or other debt, financial advisers said. Scores are used in a range of insurance and healthcare decisions, from setting your premiums to whether you are accepted to an assisted-living facility.

(snip)

Average FICO scores rise as consumers get older, peaking in one’s 70s at 762, according to company data. After age 79, the average score falls to 756. As long as your score stays in the 660-780 range that most lenders consider “good,” a small postretirement drop shouldn’t affect your finances much, credit-industry executives said. A decline in score matters most to those who fall below that threshold.

Retirees typically have longer credit histories, which keep overall credit scores healthy, but closing decades-old accounts, even inactive ones, can cause a steep drop in your score. Income and employment data aren’t included in the calculation, but credit scores do reward borrowers for having a mix of different kinds of loans, which can hurt those who have already paid off mortgages and auto loans...To maintain a healthy credit score, retirees should continue to keep credit accounts active by using them regularly, Dornhelm of FICO said...

(snip)

Most seniors’ debt is tied up in mortgages, although many retirees are carrying credit-card debt, according to the National Council on Aging. The combination of lower or fixed income in retirement with higher interest rates and inflation can quickly make debt burdens unmanageable for retirees, advisers said.

More..

https://archive.is/9lKu0#selection-182.0-182.1

[kevink077]

1. Biggest crooks ever

These credit companies should be the most regulated companies in the history of commerce. Instead they are allowed to screw people for profit .

[2naSalit]

8. +1

I have the upper hand here... I'm poor and have no plans to borrow for anything and I'll have to move again but I have that covered so I don't need them and their credit rating. The last dealings I had with an outfit of that kind was them telling me they were hacked and I was vulnerable.

[jimfields33]

16. I'm done with them. 62K left on mortgage and then they can pound sand.

I’m 54 and hopefully I’ll pay off the house by 60. I don’t care if the credit score goes to zero after that

[liberal N proud]

2. Current plan is to work until I am 70

If my health permits.

Hopefully by 70, I won’t need credit.

5-1/2 years to go, just started a new career, new challenges

[OAITW r.2.0]

3. Paid off my credit cards years ago.

Every year they reduce my credit.....oh well...

[BlueWaveNeverEnd]

5. me too. and I have alert notification with Experian, so they like to tell me my credit score is

reduced. LOL

[Timewas]

4. Yes

Paid off our mortgage and credit rating dropped 20 points.....

[PoindexterOglethorpe]

6. Really?

I am retired, 74 years old, still paying a mortgage. My credit score is 817. What am I doing wrong?

Okay, so I don't have ongoing credit card debt, as I pay off my credit card each and every month.

[Fiendish Thingy]

7. 817 is a very good credit score

You’re not doing anything wrong.

[PoindexterOglethorpe]

11. Right. Which is why I don't understand

the OP here. Paying your bills is A Good Thing.

[Fiendish Thingy]

17. I think some seniors' score lowers the older they get

Low or No verifiable income, and lender may feel they won’t live long enough to pay off the debt.

[2naSalit]

9. Still paying a mortgage.

that's what is carrying you, making payments.

[PoindexterOglethorpe]

19. So maybe the conventional advice that you absolutely must have

your mortgage paid off to retire is actually bad advice.

After a divorce at age 60 I moved to another part of the country and bought a home. 30 year mortgage. The payment is just about exactly 25% of my income. So highly affordable. Yeah, it's nice if you buy a home when you're 25 or 30, and so it's paid off by retirement, but not everyone's life works out that way.

[2naSalit]

21. It seems to me...

That our economy, for we little people, requires that you maintain debt of some sort for which you make regular payments in order to be in good standing (in the game). You are no longer considered a participant worth taking "risk" on if you don't have a regular obligation to someone or some agreement to which you part from your money on a schedule.

[brush]

10. Just keep a bank debit card, maybe a credit card too...

and use them to shop online or charge groceries to them or restaurant meals out.Don't overdo it, keep your spending the same, just put it on one of the cards. Pay you bills on time every montn and your score with stay the same.

That's what I've been doing since retiring. I refi-ed my mortgage a couple of years ago and reduced my mortgage $2400 to $1568 (fair credit but a bunch of equity in the house), then the credit when up after paying everything on time for a year, in the 760 range.

[PoindexterOglethorpe]

12. Yes. You are exactly right.

I personally don't use a debit card (I have one, but only use it to take cash from my checking account for spending money each week) but you might prefer to use one. However, I've noticed that those who use debit cards often wind up spending a lot more money than they should. Personally, I don't use a debit card (other than to take cash for my spending money each week, as already stated). I've noticed that young people who use debit cards to pay for almost everything simply don't have money left in their accounts. Hmmm. Think about it.

I'm of the opinion that debit cards are a Very Bad Idea.

[brush]

15. Guess there's more than one way to do it. I don't carry much cash.

I just use the card for my spending. I'm no youngster and have discipline to keep my spending at the same level as if I was paying for it with cash.

It's easy for me and it's keeps my credit rating high as I pay my bill on time every month.

How's your rating since you don't use your card but for withdrawals? Bet it would be higher if you put your spending on the card and paid your bill on time every montn. That way the credit rating companies have a record of you paying on time every month, which keeps your rating high.

[PoindexterOglethorpe]

20. I have a credit card which is paid off every month. My other bills,

water, electricity, etc, are also paid on time. My credit score is 817, so it essentially couldn't go higher.

And I suspect a debit card doesn't affect credit scores much, since that's taking money directly from the checking account.

I also think it's a mistake to never carry any cash, as sometimes a place doesn't accept cards. Or there's a minimum charge, so you are spending more than intended.

[Mr. Scorpio]

13. It's not impossible to remedy tho...

I’ve been retired for 18 years. I’ve just checked my credit score. No complaints at all.

It all depends on what kind of lifestyle you want in your later years.

[LisaM]

14. This likely hurts renters, of which I am one.

Heck, everything hurts renters.

As we near retirement, we will need a cheaper place and renting a new place is a pain these days, let me tell you. They check everything and charge you for it. Retirement terrifies me.

[Joinfortmill]

18. This may be true but it isn't my experience.

So, I'm in my 70s with no debt. I do have 2 credit cards I pay in full each month. My credit score has been over 800 for years.

[trof]

22. I'm almost 82 and my score is above 800.