A disturbing trend has developed in recent years in which people are retiring with substantial amounts of debt. Some of the people carrying debt also have bad credit. But if bad credit can be a problem during your working life, it will be even more so once you retire. That’s why you must repair your credit before you retire.
It Will be Easier to Fix Your Credit While You Are Still Working
Once you retire, it’s likely that your income will be lower than it is while you were working. That will make fixing your credit even more difficult. In addition to the reduced income, is the reduced opportunity to earn more income. While there is often a way to increase working income, such as getting a higher paying job, taking a second job, or working toward a promotion, retirement income is limited by the fact that it is fixed.
For that reason, you should get your credit repaired before you retire. The higher income and greater income opportunity that working provides will make it much easier to deal with your credit issues than when you are on a limited retirement income.
New Credit May be Harder to Get on Retirement Income
If you are entering retirement with bad credit, there will be two constraints working against you should you apply for new credit. The first obviously is your bad credit history. But the reduced income in retirement will be pulling you down from a different direction.
While it’s obviously better to have as little debt as possible in retirement – or none at all – it is likely that a time will come when you will have to turn to credit. This may be because you need to purchase a new car, make a major repair to your home, pay for a large uncovered medical expense, or even to help one of your children or grandchildren.
For all those reasons, you want to enter retirement with a clean credit slate. That will not only enable you to get the credit that you want, but also to get it with the most advantageous pricing.
Guarding Against the Potential for Asset Seizure
If you have collections and judgments on your credit report, there is potential for the creditors behind those debts to seize certain assets. While tax-sheltered retirement assets are usually excluded from such claims, creditors can go after your bank account or any non-retirement investment accounts.
Under extreme circumstances, income garnishment is even possible. You should want to eliminate any potential for these outcomes before you retire. After all, part of the reason for retiring in the first place is having peace of mind. The bad credit that you have built up during your working years might interfere with that peace.
Bad Credit Affects Insurance Rates
If you have bad credit, it can affect the premiums that you will pay for various insurance policies. This can include life insurance and auto insurance. Auto insurance can be particularly problematic. If the insurance company rates you for poor credit, and then you get a traffic citation, or get into an accident that is deemed to be your fault, your auto insurance premium can skyrocket.
Clearing up any credit problems before you retire is the best way to prevent these outcomes.
You May Need Financing to Move to a New Residence
At some point during your retirement years you may experience the desire or the need to move to a new residence. That could come from the desire to follow adult children, the need to downsize, or even health concerns.
When it comes about, you may have to obtain financing to enable you to make the move. Bad credit can make that more expensive, or it could even make it impossible. The last thing you will want to happen is to have your plans torpedoed by a bad credit history.
You May Need to Access Credit Lines for Emergencies
Financial emergencies don’t magically come to an end on the day that you retire. In fact, it’s even possible that they might increase, especially during certain unlucky timeframes. Though it’s important to have emergency savings to cover such events, that may not always be enough.
During an extended cash crunch, or during a series of emergency events (they do happen), you may need to turn to credit lines to fill the void. If you have a history of unrepaired bad credit, then the credit lines you need may be either very limited or completely unavailable.
Getting Your Credit Repaired Once and For All
You can avoid all of these negative outcomes by getting your credit repaired before you retire. That will not only remove the problems that come from bad credit, but also enable you to retire with greater peace of mind.
It can be difficult to fix your credit in the years leading up to retirement, but even more so if you have already retired. If you have, your best strategy is to enlist the help of a credit law firm. They can get your credit problems fixed quickly, efficiently, and most of all, legally.
Whatever you do, get your credit problems repaired in time for your retirement, that way you’ll enjoy the peaceful life you deserve.