Retiree credit cards
Why your credit cards shouldn’t retire when you do
About one-third of American baby boomers risk damaging their credit scores in retirement by reducing or eliminating their use of credit cards, according to a survey by TransUnion, one of the three major credit bureaus that gather information used to calculate the scores. (TransUnion is a NerdWallet business partner.)
Using credit cards for small purchases keeps your credit active. That can help ensure you'll have available credit — or good credit scores — when it counts.
1 Why you might need credit in retirement You might need good credit in retirement for many reasons, such as an unexpected car purchase. Other reasons include:
Finding housing. Some independent living facilities require a pre-admission credit check, the way a landlord might run a credit check before renting an apartment.
Co-signing a loan. You’ll need good credit to help a child or grandchild qualify for a loan or credit card by co-signing.
Receiving a home equity line of credit: You can use this type of credit to finance repairs and upgrades that will make your home more accessible, says certified financial planner Delia Fernandez. For example, you might widen doorways to accommodate a wheelchair or walker.
2 Keep your credit cards active TransUnion vice president Heather Battison’s dad recently moved to an independent living facility. “All of the furniture that he had in his home was too big and we all of a sudden needed to completely furnish this apartment,” she says. “Because he didn’t use his credit card as often, we ran into some issues there.”
Beverly Dobratz learned this lesson the hard way.
Dobratz, 70, assumed that years of responsible credit usage would qualify her for a new car loan with a low interest rate.
Then the salesman checked her credit and learned that she hadn’t made any purchases with it in 10 years; she preferred to pay with cash or her debit card. That had hurt her credit scores, preventing her from getting a deal that worked for her.
“It was quite a shock. I had a huge down payment for him, but it didn't make any difference,” the Long Beach, California, resident says. “I didn’t get the car.”