How to Build Credit for Retirees

If you're retired and your credit needs some work, you might be unsure of how to improve it. You also might wonder whether it’s really worth it. 

Generally speaking, it’s ideal to start building credit early in life. But no matter what age you are, you have plenty of reasons to aim for a good credit score. Here’s a look at how to build credit for retirees.

How to build credit for retirees: An overview

Whether your credit needs major work or you just want to keep it healthy, these credit-building strategies could help.

Keep credit accounts active

If you go for six to twelve months without using one of your credit cards, the lender may close the account. This lowers your available credit, which increases your credit utilization rate. That can lower your score.

Also, if you had held the card for a long time, closing it can lower your average age of accounts. This can also cause a dip in your credit score. 

You don’t have to use your cards for everything. But making and paying off at least one purchase per month per card can go a long way toward maintaining your credit.

Monitor your credit

Before you work on building your credit, take a look at your credit report. That way, you’ll have a baseline score to track your progress.

It’s also important to regularly monitor your credit report for any fraudulent or inaccurate items. If you see something that doesn’t belong, contact the credit card issuer or lender right away.

Use a credit-builder app

If you think your credit could use an extra boost, try a credit-builder app! Each app operates slightly differently, but here’s how they generally work:

• After approval, you get a small line of credit or a loan
• You make regular payments 
• The lender reports those payments to credit bureaus
• Your credit score can increase as you build a positive payment history

If you’re considering using a credit builder app but aren’t sure where to start, Kikoff can help. Once you’re approved, you’ll gain access to a small credit line to purchase items in the Kikoff store. We report your payments to the credit bureaus to help you build credit as efficiently as possible.

Hard inquiries and interest rates can easily get in the way of your credit-building journey. That’s why we don’t do a hard credit check when you apply, and we don’t charge interest on purchases either. 

How credit works while in retirement

Retirement itself won’t impact your credit score. However, there are a few different ways it may indirectly influence your creditworthiness:

• Lower income in retirement may mean that it’s harder to get approved for loans and credit cards
• If you stop using credit accounts and they close, they may be deleted from your report
• Retirement accounts are common fraud targets, so if you don’t monitor your credit report, identity theft could impact your score

In retirement, your credit score may not be as critical as it was when you were saving up for your first home, for example. However, being retired doesn’t mean you’ll never apply for a loan or credit card again, so building credit and improving your score is a good idea.

Is it worth it to build credit as a retiree?

You might wonder whether it’s worth learning how to build credit for retirees. However, even if you’ve left the workforce, building your credit comes with several advantages.

Potentially lower insurance premiums

Companies that sell home and car insurance policies can take your credit score into account while deciding your premiums. Working on your credit might mean you have to pay much less for insurance.

Access to emergency funds

What happens if you have an emergency and need to suddenly access money? When you have good credit, you’ll likely find it easier to get approved for loans and high-limit credit cards.

Housing flexibility

Like many retirees, you might decide to sell your current home and downsize. If you’re renting, you might dream of moving somewhere a little more peaceful.

Having good credit makes it easier to find your next home. This is true whether you’re renting or buying. Mortgage lenders use your credit score to decide whether to approve your application and how to set your rates. And in many areas, landlords are allowed to look at your credit as part of your rental application.

Common mistakes to avoid

If you want your credit-building experience to be as smooth as possible, take care to avoid common errors like these.

Freely cosigning loans

If your credit score is already respectable, your children or other relatives may ask you to cosign loans for them. However, think carefully before you do this. If the borrower defaults, you become responsible for the debt, which can seriously impact your credit.

Ignoring your credit report

If you don’t regularly check your credit report, you may not catch credit-damaging errors or signs of identity theft.

Carrying high balances

Responsible credit card use can improve your credit. However, if your balance is more than 30% of your limit, you could end up lowering your score instead of building it.

Missing payments

Your payment history is the most important factor in determining your credit score, and even one missed payment will impact your credit for up to seven years.

Need to build credit in retirement? Kikoff is here to help

Kikoff aims to make building credit simple, and you don’t have to be tech-savvy to use the app. We’re always here to answer questions, and it only takes a few minutes to set up your account.

If you aren’t sure how to build credit for retirees, get started with us!