For Mark Roberts’ Use: As you manage your retirement funds – whether you’re already retired or just preparing for that stage of your life – one of the many aspects of your financial activity you should continue to manage is your credit score. You already know that credit scores are important, but just how important are they?
Statistics show that retirees and soon-to-be retirees are better at managing their credit than younger consumers. A study by Experian, a leading consumer reporting agency, concluded that those age 66 and older had the highest credit scores. This group was followed by consumers age 47 to 65. This is probably no surprise – after all, you’ve been around longer, learned more about managing personal finances, and you’ve had years to make smart decisions and manage your credit wisely.
A common mistake, however, is to assume that a good credit score automatically translates into positive financial standing. There are other factors that need your attention, which can influence your overall financial strategy.
For example, while many people in your age group have lower debt due to paying down or eliminating mortgages and student loans, you’re more likely to carry higher credit card debt. Experian’s study revealed that those aged 66 and older carry credit card debt that is 43 percent higher than the national average. Carrying a large amount of revolving debt can be dangerous in a world where the cost of gas and groceries is increasing, but your fixed income is staying the same.
For consumers aged 47 to 65, the total household debt was calculated at 30 percent above the national average according to Experian. This is probably due to the fact that most people in this age group are still paying down mortgages, and their children have reached college age at the same time. Second mortgages are another common concern. The good news is that those of you in this age group are in your prime years for earning potential. The bad news, of course, is that you may have a considerable amount of debt to pay down before you can retire.
Earning a good credit score is a worthwhile goal that will positively impact your financial future. However, the lesson to be learned from these statistics is that we should all keep an eye on our debt load as well, and keep debt under control as we head into retirement.
Source: Experian, 2012