A person’s credit score matters at any given age. However, it can also affect important choices after 60. Tasks such as renting, refinancing a mortgage, or getting insurance can depend on one’s credit. There are several myths about credit scores for people over 60. These myths can cause a person to make choices that hurt their scores. Continue reading to learn more about 10 credit myths that could destroy your credit score after 60.
10 Credit Myths That Could Destroy Your Credit Score After 60
Here are the 10 myths relating to credit scores for people after 60. The truths are also explained to help people understand their credit scores better.
1. Closing Old Accounts Will Help One’s Credit Score
This is a myth about credit scores. It says that if a person is not using old credit cards, closing them would improve their score. However, this is a lie. The truth is that closing old accounts can lower one’s score. A longer credit history helps show lenders that the person is reliable. Thus, closing an account also reduces one’s total available credit. They can keep old accounts open. This is unless there is a strong reason to close their accounts. These could be fraud or high fees.
2. Income Directly Affects One’s Credit Score
This is also a myth that if income goes down after retirement, the credit score will also drop. In reality, income does not appear on one’s credit report. Also, it does not directly affect a person’s score. The truth is that it depends on how the person manages their credit. It includes paying bills on time, keeping balances low, and limiting new credit applications. Thus, even with fixed retirement income, one can have a strong score. This is if they handle their score well.
3. Checking One’s Own Credit Report Hurts Their Score
This is a myth that checking one’s own credit report hurts their score. In reality, it is a soft inquiry. It does not affect one’s score. Also, hard inquiries, such as applying for new credit, can have a small temporary impact. However, regularly checking helps figure out errors or signs, or fraud early. Thus, a person can avail a free annual credit report from each major bureau.
4. Carrying a Balance Improves One’s Credit
This is a myth that says that carrying a balance improves one’s credit scores. The truth is that it does not help a person’s credit score. However, it costs them money in interest. Thus, it is better to use credit and pay in full each month whenever possible. Also, keeping one’s credit utilization low, about 30% is more helpful than carrying balances.
5. One’s Credit Score Does Not Matter After Retirement
This is a myth that says that a person’s credit score does not matter after their retirement. In reality, it still matters. It can affect mortgage refinances, car loans, rent, and insurance. Also, some landlords, lenders, and employers check credit. Thus, keeping a healthy score provides more options and can save money on interest.
6. All Debt is Bad For Credit
The myth says that all debt is bad for credit. However, the truth is that responsible debt can help bring up the score. Mortgages, car loans, and other debts paid on time can build a positive credit history. Problems arise from missed payments or maxed-out credit cards. Thus, a mix of credit types is not unhealthy if one can manage to pay the debts on time. Also, if a person has no debt at all, the credit file may be too thin.
7. One Cannot Rebuild Credit After 60
This is a myth that says a person after 60 cannot rebuild their credit. However, one can rebuild at any age. They can start by paying bills on time and reducing or paying off old debts. Also, they can consider a secured credit card if they need to build a positive history. Thus, their scores can improve over time with consistent, responsible habits. Several people rebuild their credit well into their 60s, 70s, and 80s. Therefore, it is not at all late or impossible to rebuild one’s credit after 60.
8. Debit Card Activity Affects Credit Score
This is a myth that says that debit card activities can alter credit scores. However, it does not impact the credit report. They use their own money and not borrowed funds. Thus, to build or improve one’s score, they need to use and manage credit products. These are credit cards, loans, or EMIs used responsibly.
9. Paying Off A Loan Immediately Boosts One’s Score Significantly
The myth states that paying off a loan immediately may boost a person’s score. However, the score change is not instant or dramatic. Although it is good to pay off debts immediately. Sometimes, paying off a loan can slightly reduce one’s credit mix. It can also shorten their credit history. This can cause a small temporary dip. However, in the long run, paying debt on time is beneficial and improves one’s credit report.
10. Credit Scores Are Permanent and Unchangeable
The myth states that credit scores always stay the same. However, the score changes according to the user’s behavior. Missed payments, high credit usage, new loans, and inquiries can lower the score eventually. Meanwhile, low balances can raise it. Thus, if a person’s credit score is low, they can improve it steadily. This can be done by inculcating responsible credit habits over time.
Conclusion
An individual’s credit score remains healthy after 60 as well. There are several myths that do not allow individuals after 60 to maintain a good credit score. Most of these myths regarding credit scores are easily debunked. They can adopt steady and responsible habits for their credit scores to do the same. It is integral to be aware of these myths as well as their solutions to maintain a healthy credit score post-retirement.
