(TNS) – Whether or not you’re one of the 147 million consumers affected by the 2017 Equifax data breach – which resulted in a Federal Trade Commission settlement of up to $700 million – retirees should stay vigilant about their credit profile, experts say.
This may seem counterintuitive, especially to those who are paying off their homes, cars, and other debts as retirement approaches. Retirement itself, in fact, does not directly harm a credit rating.
But no credit can, indeed, torpedo a pristine credit score, because payment history over the past two years — or lack thereof — is the primary determinant of a credit score. The length of credit history, where most retirees can really shine, weighs less than half the weight of the overall payment record.
And a drop in credit score can be problematic, even for retirees.
“It’s an important tool to have on hand and to protect,” said Rod Griffin, director of public education for Experian, one of the three major credit reporting agencies.
A subsequent move, purchases of items like cars, cell phones, or insurance, even applying for a reverse mortgage, may require a solid credit score. What to do?
Consider these five moves:
Leverage the positive. Retirees who have experienced a decline in their credit rating could be ideal candidates for Experian Boost, a program that allows consumers to give the agency insight into their checking accounts to verify positive bill payment history. utilities and cell phone.
Two-thirds of customers who try the Boost program see their scores increase, Griffin said, with an average increase of 12 points. Note that it cannot undo bad credit behavior; it may simply help consumers with thin credit records to flesh out their profile.
“When you think about people retiring, if they add recurring utility payments on time, that could help keep business going” on their reports, he said. The program is most useful for people who started with scores below 680. (Scores range from 300 to 850.)
Embrace the frost. If you’re retired and have no plans to move or buy a car in the short term, now may be the time to freeze your credit with the three major bureaus, Equifax, TransUnion and Experian. If you do this, creditors cannot access your information until you remove the freeze with a PIN. So, keep this number in a safe place. For a fee, the bureaus offer a credit freeze, which can be removed without a PIN, but may not offer all the protections of a true freeze.
To clean. Many credit experts tell consumers never to close credit accounts because it can hurt scores, but Griffin says any downturn is usually short-lived.
“If you close an account, your scores will go down, but they usually recover in two or three months,” he said. If you don’t plan to buy a house or a car in the next six months, cleaning up orphan accounts might be a good idea now, he said.
Be ready. If you’re considering a reverse mortgage, where a lender provides funds to homeowners age 62 and older who are tied to the equity in their home, know that your credit history is now part of the equation. Since 2015, these lenders have been required to assess whether a borrower has the ability to continue making home improvements and paying property taxes, and credit reports are a key part of the equation.
Look for a bargain. If you would like to check your potential eligibility to claim part of the Equifax Settlement, go here: https://eligibility.equifaxbreachsettlement.com/en/eligibility. To file a complaint, go here: https://www.equifaxbreachsettlement.com/file-a-claim.
“You should always be diligent about managing your credit history,” Griffin said. “It can affect a wide range of financial transactions and you want it to be there for you when it’s needed.”
©2019 Tribune Content Agency
Distributed by Tribune Content Agency, LLC