Five questions to ask older parent about credit situation

Conversations about money often require sensitivity and patience, especially when the person across the table is an older parent.

Some of us won’t need — or want — to get involved in someone else’s finances. But others might have to take a role in helping an older parent manage their money. If that’s the case for you, don’t neglect a discussion about credit. Good credit matters throughout life, so any conversation you have with a parent should focus on building and maintaining healthy credit.

Here are five credit-related questions to ask older parents if you don’t know where to start.

1. What’s your credit score?

Good credit scores can create opportunities and unlock lower interest rates, and they still matter even as we age. Maybe your parent wants to downsize to a new home or settle in a retirement community; having a good score can be advantageous in both scenarios.

If their score is lower than they had hoped, develop a plan together for elevating it. Paying loan balances on time and using less than 30 percent of available credit can lift scores. Older parents with limited credit can open a secured credit card to help them build a credit history.

2. Have you reviewed a credit report?

In 2023, data compromises affected more than 350 million Americans, according to the Identity Theft Resource Center. Each data breach presents an opportunity for a bad actor to steal someone’s personal information, which can cause financial trouble for the victim. That’s why Liz Kishel, a certified financial planner at Modera Wealth Management in Atlanta, urges older people to examine their credit reports. The three major credit bureaus, Equifax, Experian and Transunion, offer a free credit report every week.

Signs of identity theft or fraud include credit cards you don’t recognize, discrepancies in loan balances on the report compared with your own records, misspelled names and unfamiliar addresses.

3. Is your credit frozen?

People can and do recover from identity theft or fraud, but it’s not always easy. Kishel’s advice: Freeze your credit to prevent fraud or theft from happening in the first place. When your credit is frozen, it becomes inaccessible to fraudsters who might want to open lines of credit in your name.

4. Do you have your own credit card?

Older parents should have a credit account in their own name, and women may need to be especially mindful on this point. Until the Equal Credit Opportunity Act of 1974, lenders could deny loans to women without a male co-signer. As such, some older women don’t have their own credit history.

It can be difficult to distinguish the primary or the authorized user on a credit card. Parents could be joint owners, or one could be the primary owner and the other an authorized user. Call the issuer of the card if you’re not sure.

5. How are you paying off credit card debt?

According to the Federal Reserve Bank of New York’s February 2024 Household Debt and Credit Report, 19 percent of debt held by Americans ages 60-69 was credit card debt, and it was 14 percent for those 70 and older. While many older parents live on fixed incomes, it’s still possible to get out of debt.

A payoff strategy such as the avalanche method (paying off debts in order of highest to lowest interest rate) can infuse a sense of order and progress into the debt payoff journey. Getting another credit card can help pay down debt, too. Balance transfer cards take on debts from other lenders and make it easier to pay them off because they temporarily waive interest, some for a year or more.