When credit-reporting company TransUnion polled boomers recently regarding their credit score, nearly half thought it was no longer important.
They were wrong. Your credit is a vital financial tool at every age because it predicts the likelihood you’ll pay your bills. Lenders use it when offering a mortgage, auto loan or credit card. Insurers also look at it to set auto and homeowners policy premiums. Prospective landlords and utility companies scrutinize it if you move into an apartment.
The problem for many seniors is that their score declines because they no longer use credit (debit cards don’t affect scores). As their house, car, and credit card payments wind down, their credit report can’t maintain a score or produces only a low one, according to John Ulzheimer, author of The Smart Consumer’s Guide to Good Credit.
Credit agencies consider several factors when determining your credit score: 35 percent: payment history; 30 percent: amount owed; 15 percent: length of credit history; 10 percent: new credit, and 10 percent: types of credit. But here are four easy ways to improve your score:
• Increase limits. Periodically ask your card issuers to raise your credit limits by $500 or $1,000. Cards with low balances and higher credit limits boost a score.
• Maintain accounts. Keep old credit card accounts open, even if you don’t use them much. Canceling a card reduces the credit available and can ding your score.
• Rebuild a History. Obtain a secured card from your bank. Deposit a sum in an account that serves as your line of credit and helps build a credit history over time.
• Check your report. Monitor all activity. Someone could access your credit and damage your score.For a free copy of your report annually, contact each of the three major credit-reporting companies. Go to annualcreditreport.com.