They Had Great Credit Scores. Then They Retired.

[question everything]

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.

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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...

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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.

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[TreasonousBastard]

1. No, or very little, sympathy. Information on what to do with your...

money is everywhere, if confusing. But, hiring a properly honest investment advisor is not so hard. Listening to one sometimes is. My stepfather listened to a bunch of fellow employees and lost half of what he had to what I thought was a Ponzi scheme.

My mother, upon his death, put the rest of it with a proper advisor who did well for her.

[3Hotdogs]

2. I've been retired for 16 years. Mortage has been paid off and I have a defined benefit pension.

".... to maintain a healthy credit score, retirees should continue to keep credit accounts active by using them regularly."

That is the shittiest advice that only a banker would give: Borrow money and pay interest so that you can borrow more money and pay more interest.

We should saving a percentage of our working income so that we don't have to borrow. Yes, I know, not everyone can do that.

AND FINALLY, do not discount bankruptcy as an option if things get out of hand.

[PoindexterOglethorpe]

3. Retiring is not the death of credit scores.

I'm 74, will be 75 next month. I stopped working some ten years ago. I have income from Social Security, a small pension, a couple of annuities. It's a modest income, one I can live on. Yes, I do have a mortgage. I honestly get furious at the advice that you absolutely must have your mortgage paid off when you retire. Excuse me, that's not always possible. In my case, my marriage came to an end when I was 59 years old. I relocated to another part of the country, got a job , and managed to have the wherewithal to buy a home. Hooray for me. My mortgage payment is about 25% of my income, exactly what it should be.

Yes, the bulk of my debt is tied up to my mortgage, but that is not my only debt. The important thing is that I can afford my debt, can afford the monthly payments. Lucky me.