The Golden Years: How to Manage Credit in Retirement

This is part two of our two-part credit retirement series. Read part one here.

When you retire, the world becomes your oyster.

You can finally take that exciting European adventure you and your spouse have always dreamed of or you can just take the time to relax in the sunshine on an empty beach.

In general, retirement allows you to focus on yourself and discover the joys of life you never had time for because you were sitting in a gray-colored cubicle for 40 or more hours each week.

Now that you’ve traded your briefcase in for a piña colada, you might think your life is all about vacation and bliss.

Granted, relaxation and vacation can be the majority of your focus now, but there is something you might still need to think about every once in a while: your credit.

If you’ve read part one of this article series, then you know that credit is still important after you retire.

After all, you never know when you might need to cosign a loan for someone, when you will have to pay for emergency expenses, or when you will choose to downsize and move closer to your grandkids.

In fact, you might not even know if or when within the next few years you will want to take out a loan to pay for that convertible you’ve always had your eye on.

Overall, the reasons for maintaining a good credit score may seem like a lot of “what if’s,” but life is full of “what if’s” and you never know what will really happen. So, it’s best to be prepared when the “what if’s” become your reality.

Now that you’ve learned about why credit is still important, you might be wondering how you can maintain your credit as you explore the joys of retirement.

If that’s the case, today is your lucky day because we asked the experts to discuss ways retirees can effectively manage their credit.

Let’s get started.

How to manage credit in retirement 

Richard Best, Personal Finance Expert and Writer at

“To maintain a high credit score in retirement, you need to be proactive in using and monitoring your credit. It is important to continue to use your credit cards. A big portion of your credit score is based on your payment history.

Use your credit cards to pay for budgeted expenses and then pay the balance in full every month.

You will (also) want to closely monitor your credit. Retirees are a main target for identity thieves who can potentially destroy your credit history.

It’s important to track your credit score, so if it should change, you can look at your credit report to learn the reason for the change. You are eligible to receive three free credit reports per year — one from each of the three credit reporting agencies: Equifax, TransUnion, and Experian.”

Sean Messier, Credit Industry Analyst at Credit Card Insider

“Maintaining your credit scores after retirement should be relatively easy if you’ve developed good financial habits over the years.

Be sure to make all payments on time, and pay down your credit card balances on a monthly basis whenever possible to keep your debt-to-limit ratio low.”

David Bakke, Credit Expert at Money Crashers

“To keep your credit up in retirement, never close older or unneeded credit cards. Keep them open and put a few minor purchases on them each month, so the provider doesn't close the account for you. This maintains your available level of credit and keeps your score intact.

Also, start or continue to analyze your credit reports, which you can do three times per year using the website AnnualCreditReport. At that site, you can access your report for free from each of the three main credit reporting agencies.

Make sure that there are no accounts that don't belong to you or any other inaccurate information. Then, pay all bills on time and keep credit card balances low, if not at $0. And by all means, be wary of scams or other criminal activity that could affect your credit in a negative way.

The strategies are basically endless at this point, but just understand that anything that sounds too good to be true in any credit matter should be avoided. If you're unsure, consult with a friend or family member or a trusted associate well-versed in personal finance if you have one.”

Randall Yates, Founder and CEO of The Lenders Network

“Payment history is the biggest factor in determining your credit score so you want to make sure you stay on top of your payments. Set up auto-pay on your accounts so you can avoid any missed payments.

Your credit utilization ratio also has a big impact on your credit score, try to keep your card balances below 20 percent of the credit limit to maximize your scores.”

Howard Dvorkin, CPA and Founder of

“There’s one simple, powerful way to keep your credit score robust. Just pay off your credit card balances in full and on time each month.

Every other hack pales in comparison. Why? Because the math says so. Thirty-five percent of your credit score is determined by payment history, which is just shorthand for, ‘You pay your bills on time.’

Another 30 percent is credit utilization, which is a fancy way of saying, ‘You don’t max out your credit limits.’ Together, those two factors represent nearly two-thirds of your credit score.

So don’t fret about any other credit score hacks till you take care of these two. Otherwise, you’re wasting a lot of time for very little in return.”

Freddie Huynh, Vice President of Credit Risk Analytics with Freedom Financial Network

Review credit reports and make sure they are accurate — All three major credit reporting agencies (Equifax, Experian, and TransUnion) are required to provide a credit report.

Retirees should access credit reports once each year for free at or by calling (877) 322-8228. If a report shows any inaccuracy, from your address to an incorrect outstanding balance on a credit card, correct it by following the directions on each agency’s website.

Understand that credit reports are different from credit scores — Information on the credit reports is used to calculate the scores. Many banks, credit unions, and credit card issuers now provide credit scores to customers.

Consumers also can purchase them from credit score services, or purchase their FICO score at

Pay every bill on time, every time — On-time payments make up 35 percent of credit scores, the largest component.

Pay down any credit card debt — Getting rid of it is one of the best investments you’ll make. It’s also a key factor in improving credit profiles and scores.

Minimize percentage utilization and maximize credit available — If the sum of your credit card limits is $10,000, and the total credit card balances you have are $3,500, that's 35 percent utilization.

Credit card utilization can be very influential to your credit score, so you want to keep your credit card balances and utilization low.

Do use credit — Credit bureaus look to payment history to help assess how someone will do in the future when it comes to repaying any debt. So, borrowing provides the information they need.

Most adults find it helpful to use one credit card, but it’s not necessary to use more than one to improve or maintain a positive credit profile.

Don’t stress if you don’t have a credit card — While many 50+ adults have the problem of too many cards, some don’t have any. Payments on any loan help build a credit history, as does paying every bill on time (and in full).

Beware of retail store cards — They can carry very high-interest rates and most people are better off using a regular credit card.

Do not carry credit card balances month-to-month — Charge no more than the amount you can and will pay off in full every month. If you can’t do that, don’t buy it and don’t charge it.

Carefully consider canceling any credit card account that has a long (positive) history — The longer you keep such an account, the more valuable it is to credit score calculations. If you don’t want to use it, store it safely away, but don’t close the account.

The bottom line

Credit may be something you want to hang up in the back of your closet after you retire, but, as you’ve read above, it’s something that takes some active focus. Not enough focus, however, to ruin your retirement life. Just enough to maintain a good credit score.

Now, what happens if you are going into retirement with a less-than-ideal credit score?

You can try to build up your credit with good habits before you retire, you can attempt to repair your credit on your own time, or you can get help from a professional credit repair service.

Overall, making sure your credit and finances are in a good place before you retire can help you more easily maintain good credit during retirement.

If you do already have good credit and are about to retire, try to keep your credit in mind, follow the expert advice provided in this article, and you shouldn’t have a problem with making future credit-based decisions.

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