Why is Credit Score Important After Retirement?

A good CIBIL score ensures speedy approval and beneficial loan terms and conditions, which is why a good credit score matters. But does retirement affect a person’s credit score and is credit score important after retirement? Let us answer these questions in detail.

Understanding the Importance of Credit Scores for Retirees

Credit information bureaus consider several factors while preparing a borrower’s credit report, such as their current debt situation, repayment history, credit card utilization ratios, hard enquiries made on them, etc. However, an individual’s credit score is independent of an individual’s age, religion, income and job status. So, retirement does not directly affect an individual’s credit rating. However, when people retire, they start cutting on their expenses. Those who have planned their retirement well, assume they will be able to spend the rest of their life on the money they have saved over the years and therefore, they conveniently forget about their credit scores. Proper financial planning can certainly help retirees spend the rest of their life comfortably without having to work. However, a financial emergency can happen at any time and when this happens, it does not matter whether you are working or retired, a loan can turn out to be the best answer. However, if your credit rating is below 750, you will have a hard time availing a loan, especially if you are a retired individual with no stable source of income. On the other hand, if your credit score is excellent, availing of credit will become easy, even if you are retired as such is the importance of credit rating in the credit world.

Let us now look at why credit score matters even after retirement.

Reasons Why Credit Score Matters After Retirement

1.It Will Help You Avail of Low Insurance Premiums

Not many borrowers know this, but insurance premium companies also check an applicant’s credit score while deciding the insurance premium to be charged from them. Individuals with a good credit score are seen as reliable and trustworthy people by these companies. Not only are these people more likely to pay premiums on time, they are also more likely to be more careful towards their health and well-being. Thus, insurance companies charge a low insurance premium from clients who have an excellent credit score. On the other hand, if your credit score is below 750, chances are your insurance company will increase the premium amount to cover up for the risk involved.

Also Read: 7 Tips to Help You Improve Your CIBIL Score

2.It Will Help You Avail of a Loan on Good Terms and Conditions

After people retire, if they are living in a big house, they usually move to a smaller one as it is far easier to maintain a smaller house than a big one. Sometimes, people think it better to buy their own house instead of living on rent. Unfortunately, lenders do not sanction Home Loans to individuals who are more than 62 years of age and at the most 70 in case of self-employed businessmen. In this case, your only option is to go for a personal loan. However, if you do not have a good credit score, your lender will charge you a high rate of interest. On the contrary, if your credit score is excellent, you will be offered the best housing loan deal, which will make buying your home and repaying the loan far easier.

3.You Can Take a Loan to Start Another Business

People who have worked all their lives find it difficult to sit at home and do nothing after they have retired. Similarly, many people want to pursue their dream or passion and start a new venture after they have retired. However, starting something new requires one to have access to money. Here again lies the importance of credit score after retirement – if your credit score is good, you will get easy access to loans. Further, you will also get the loan on beneficial terms and conditions, such as low interest rates, higher loan sanction and long loan tenor.

Also Read: Easy Ways to Maintain a Good Business Credit Score

4.Availing of a Good Credit Card Also Becomes Easier

After you retire, it is crucial that you get yourself a credit card that fetches you high reward points and cashbacks. However, you will be able to get yourself such a card only if you have an excellent credit score and credit rating.

Final Words

Just because you have retired, it does not mean your credit score is any less important. Unforeseen situations can happen at any time and when these situations arise, loans turn out to be the best answer to problems. If you are retired and your credit score is below 750, it will be very difficult for you to get access to a loan. On the other hand, if your credit score is excellent, your being retired will make no difference and you will be able to avail yourself a loan on best terms and conditions. This is why credit score matters after retirement and why you should make sure yours stays good even after you have retired.