East Texas Senior News – Credit Tips for Retirees : SETX Seniors

East Texas Senior News – Credit Tips for Retirees

Posted by SETX Seniors on Wednesday, April 19, 2023 · Leave a Comment

Southeast Texas Retirement Planning

You have never had bad credit; make sure you also don’t have “no credit”.

You’ve spent your whole life managing your money with flawless proficiency. You have a sparkling credit score and very little debt. But is it possible to get to a point where you have so little debt that you could actually fail to register a credit score?

For Golden Triangle senior citizens who have paid off most of their major debts, such as home and auto loans, and don’t use credit cards or store retail credit on a regular basis, the possibility of becoming “unscoreable” exists. This can happen because credit score models rely on recent credit activity in order to generate an accurate score. If all recorded credit activity has stopped, then there’s no recent information to use as the basis for a credit score. You do not have bad credit, but if you have had everything paid off for a number of years you may appear to have “no credit”.

This actually happens to a lot of SETX seniors who follow a Dave Ramsey style system. You pay off your house early, you pay cash for your vehicles, and you do not carry credit card debt. Then one day you check your credit and find out you do not show up at all.

Why is having a credit score important for Southeast Texas seniors?

Southeast Texas senior citizens who have paid off your mortgage and have plenty of savings on hand to last you the rest of your life, you might wonder why maintaining a credit score would be important. Although you may not be planning on taking out another home loan or making other major purchases on credit, you may need a score for other life events, such as:

* Financing unexpected needs
* Applying for rental housing if you plan on selling your house and downsizing
* Establishing an account with a cellphone provider or other utility
* Acting as a co-signer on a loan like a child’s home or grandchild’s college education
* Entering into a reverse mortgage

Southeast Texas senior retirement tips: How to avoid becoming “unscoreable” or having “no credit score”.

While it may seem logical to close accounts that you don’t use or need, you can keep your score active by maintaining them. This is especially important for Golden Triangle senior citizens who have paid off your mortgage and auto loans.

Some Southeast Texas financial planners recommend keeping at least one credit card active. It’s a good idea to use each of your accounts at least once every 24 months so that your payment data gets reported to the three national credit reporting companies (CRCs) – Equifax, Experian and TransUnion. You can avoid incurring interest simply by paying off your balance after making a purchase. It doesn’t have to be a major purchase – some Southeast Texas seniors use their credit card for gas fillups or for groceries and pay the cards off monthly to avoid ever paying interest.

For Golden Triangle senior citizens who want to close out credit card accounts, it’s best for your credit profile if you keep the oldest accounts active. Credit score models put greater emphasis on the older credit accounts in your credit files because it demonstrates that you have a reliable history of on-time payments.

Southeast Texas Senior Retirement Tips. What to do if you find yourself without a credit score:

If you end up in this situation, Southeast Texas seniors can open a secured credit card, which is a credit card that includes a deposit. Be sure the card issuer reports payments to the three major CRCs. Some of these cards convert to a regular credit card after a certain period of time.

Another option is to work with a lender that offers manual underwriting, or one with whom you already have an established relationship and knows your finances. Some of the major lenders have the ability to issue credit the old-fashioned way by reviewing your credit files and other data to determine the specific terms if you qualify for a loan. Here again, be sure to work with a lender that is reporting payments so you can re-populate your credit files.

Often a Southeast Texas owned bank or credit union that you have an established relationship with will have a lot more flexibility to work with you, so keep up those relationships.

Once you begin rebuilding your credit, SETX seniors will actually become eligible to receive a credit score as soon as one month after a lender first reports your payment information to the CRCs, though for other models this time frame could be as great as six months later.

Doing what you can to maintain the credit score you’ve worked so hard to establish over the years is important. If you do end up without a credit score, know that anyone – especially Golden Triangle senior citizens with a solid financial history – can rebuild their credit by taking a few easy steps.

After all, it is not that most Southeast Texas seniors have bad credit, it is just that some of us who pay cash for everything eventually have “no credit history” anymore.

We hope you have enjoyed today’s feature article Southeast Texas Retirement Planning – You have never had bad credit; make sure you also don’t have “no credit”.