Managing credit is an important issue for all of us. However, it is comparatively easier for empty nesters or retirees to manage their credit. This is because most of their debts have been paid off. However, it is advised that retirees should manage their credit or else they may be in a difficult situation if they wish to take a out a loan or a mortgage later on.
Here are 4 significant tips that can be of great help to the empty nesters:
1. Take a look at your credit report every few months: It is very important to know what is reported in your credit report. Free credit report is available once a year from annualcreditreport.com. Not only should you use the option of free credit report, you should also get hold of your credit reports every few months and check out the items mentioned in it. This will help you know whether or not you're staying current with your payments. If there are some errors, take required steps to fix the issue immediately.
2. Take steps avoid ID theft: Identity theft has been a problem for everyone irrespective of whether he/she is a retiree or a young person. One thing which can help retirees in case of an ID theft is "credit freeze". If you freeze your credit, the credit bureaus won't allow anyone to pull your credit history without your permission. Thus, the chances of identity theft will get reduced.
3. Try using your credit cards sometimes: It has been found that many retirees don't have credit score though they had a lifetime of great credit. If you're not using your credit cards, then your creditors won't be able to report any activity on that card to the credit bureaus. Thus, the credit bureaus won't be able to generate a score. Also, if the credit card issuers find that you haven't been using the credit cards for more than a few months, they may close your accounts. So, it's recommended that you make small purchases using the credit cards after every few months and pay off the debts on time.
4. Avoid co-signing for loans: Many retirees, who have a good credit score, co-sign for the loans taken by their children/family members. It is advised not to do so. If you co-sign for a loan, you become equally liable for paying it off. It will also be mentioned in your credit report as your obligation. Apart from that, it will increase your debt to income ratio. If the primary borrower defaults on the mortgage payments, then you (the co-signer) will become responsible for paying it.
Hope these 4 credit tips will help you sail through your golden years in a better way!