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5 Reasons Your Credit Score Matters During Retirement

Thoughts of retirement conjure up many things, perhaps including exotic travel, long walks and even a second career. Retirement is the prize after years of work. What probably doesn't come to mind when you think of retirement is your credit score.

You may think that you can just stop monitoring your credit score once you retire, but this may not be true. While you're (hopefully) not racking up more debt during retirement, here are five reasons you should still put effort into ensuring that your credit history stays clean and your credit score stays high:

1. Refinancing your mortgage. Sure, the goal is to go into retirement debt-free, but almost 40 percent of households headed by seniors ages 60 to 64 carry a mortgage, according to a study by the research group Strategic Business Insights. If you're one of those adults heading into retirement still saddled with a mortgage, a high credit score can be a big help.

A good FICO credit score gives you the ability to refinance your mortgage when rates drop, which could save you significantly on your monthly mortgage payments. If you get into a financial pinch, a cash-out refinance could also give you immediate access to cash, though this is recommended only in limited circumstances.

2. Getting the best rewards credit card. It can be a great idea to use a credit card for everyday expenses during retirement, since a good card can let you rack up rewards. And as long as you're paying off your card in full every month, you don't have to worry about paying interest.

People with the best credit scores have access to the best rewards credit cards - especially platinum-level travel cards. If you plan to travel at all during retirement, using a card like this could seriously offset the costs of airfare, hotel fees and more - all at no extra cost to you.

3. Keeping great insurance rates. Car and homeowners insurance companies use credit scores as part of their price metrics. The higher your credit score, the more responsible you look in general, which means lower insurance premiums.

Even during retirement, you should shop around for insurance once a year or so, to see if you can save any money with a new company or plan. And if your credit score is still high, you'll have access to better deals and more negotiating power with insurers.

4. Helping you spot identity theft. This is less about your credit score than your credit report, but it still applies. Retirees who think their credit scores don't matter at all may completely put them out of mind and stop monitoring their credit history.

Unfortunately, senior adults are prime suspects for identity theft, and those who don't regularly check their credit reports run the risk of not knowing when they're victimized. Even if you don't plan on ever using credit again, you should check your credit report every few months to look for suspicious activity or mistakes.

5. Second acts. The meaning of retirement is getting a makeover. For many people, retirement doesn't mean not working; it means finally doing work you love. While many second acts do not require much capital investment, some do. Whether in the form of a home equity line of credit or an unsecured loan, a good credit score can help retirees raise capital at attractive rates to fund their second career.

Rob Berger is the founder of the popular personal finance blog, the Dough Roller.

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