Older Americans may seem to have out-saved their need for a good credit score. They may be living comfortably in a paid-for house on a fixed income. They definitely don’t plan to finance any big purchases with credit. And perhaps they’ve heard stories about older people who were using credit to finance everyday purchases and they just don’t foresee any reason to have a credit score. So can they finally stop caring about those three digits that have such a powerful impact on people’s access to borrowed money? Would it really be so bad to become a “credit ghost?”
Well… they could turn their backs on credit, but it could be something they regret. It’s a little like leaving your umbrella at home when “widely scattered thunderstorms” are in the forecast. You might not need it. Or, you might get drenched, wishing you’d taken the trouble to bring your umbrella. Because like pop-up thunderstorms, occasions where you might wish you’d kept your credit can come without much warning.
Unexpected Healthcare Expenses
Living on a fixed income is a lot easier when you also have fixed expenses. If a prescription is too expensive, you can ask about possible free samples or discounts. But if those are unavailable, credit could conceivably help keep you from delaying or going without needed treatments. And even if you have access to additional funds, it’s a good idea to check with a tax professional to be sure that you’re drawing money out of the right bucket so that you don’t accidentally cause yourself a tax problem.
It’s difficult to make travel reservations without a credit card. (While debit cards can also serve this purpose, they lack many of the protections credit cards offer, and in some cases fraud could drain your checking account.) And don’t forget that not all travel is leisure travel planned well ahead of time. You may need to travel for an emergency situation, for example.
A Tip-Off to Identity Theft
Keeping an eye on your credit reports and credit scores can give you an early warning that your personal data has been compromised. (You can get annual credit reports for free from each of the credit reporting agencies, and you can get free credit scores, updated every 14 days, from Credit.com.) With the daily drumbeat of reported data breaches, it’s all but impossible to keep up with which businesses have been hacked. And sadly, older people are particularly at risk for scams. An adult child might offer to go over these credit documents with a parent to make sure all is well.
Scammers often prefer to be paid via prepaid debit card, because that money is all but impossible to recover. Not so with credit cards. Laws offer protection when services are not performed or products not delivered as agreed. And should the card fall into the wrong hands, there is more time to report the missing card than there is with a debit card.
Paying for Insurance or Utility Deposits
A higher score can reduce the cost of some types of insurance — car insurance, for example — and can eliminate the need for big deposits with utility companies. (And there are other perks if grandparents choose rewards or cash-back cards.)
If one partner has all the credit in his or her name (with the other as an authorized user, perhaps), it could be difficult for the surviving spouse to establish credit on their own. And for the reasons described above, they might want to. They almost certainly won’t want to have no choice in the matter.
A good credit score doesn’t require that you spend a lot — just that you repay as agreed. You can — and may choose to — return home from an errand and pay online for the gasoline you just put in your car even before you receive a bill. It’s never smart to apply for credit you don’t need, but keeping your score in top shape and monitoring it can’t hurt — and, like that umbrella, it just might come in handy.
More on Credit Reports and Credit Scores:
- The Credit.com Credit Reports Learning Center
- What’s a Good Credit Score?
- How to Get Your Free Annual Credit Report