Your Credit in Retirement


Your credit score isn’t directly impacted by your income. But when you retire, there are ways your credit health may be affected by your new lifestyle. Even though you may rely on credit less often in retirement, maintaining healthy credit is important for a variety of reasons.

In this article:

Why credit is important in retirement
Does income affect credit score?
Protection from identity theft
How to identify scams

Retirement can bring a renewed sense of freedom and, at the same time, uncertainty. How will you spend your days? Travel? Spend more time with family? Take up new hobbies? One area you don’t want any uncertainty is with your finances. You’ve worked hard to position yourself to be financially ready for this next step. It’s not just your assets and income you need to monitor—keeping a watchful eye on your credit is important too.

You may not have any big purchases on the horizon, but credit will still play a role in your retirement. Below are some tips to help you maintain healthy credit and keep your identity safe at this stage of your life.

Why credit is important in retirement

You’ve likely spent decades building up a comfortable nest egg so you can pay your bills and enjoy your days. You’ve also likely spent that time slowly building up your credit health as well. Some retirees may not plan on making any major purchases or using financing if they do. But even in retirement, unexpected circumstances or opportunities may come up — you want to be sure you’re prepared.

Here are some situations in which your credit score may come into play during retirement:

  • Healthy credit will help your approval odds and help you secure the better terms, like lower interest rates on homes and cars
  • If you choose to rent an apartment, a credit check may be required during the tenant screening process
  • Setting up utility services at a new location may require a credit check
  • Good credit may prevent you from having to put down a security deposit for utility services
  • If your insurance company uses a credit-based insurance score to, in part, determine your policy rate, a good credit score could help you save on insurance premiums

Does income affect credit score?

Your income does not directly affect your credit score. Neither does whether you receive government benefits. So, if you’re now living off a fixed income or receiving Social Security payments, it has no direct relationship with your credit. However, there may be some indirect relationships between your new lifestyle and your credit health.

Living on a fixed income can pose challenges, especially with rising inflation. According to TransUnion’s latest Consumer Pulse research, 52% of Baby Boomers cut back on discretionary spending and 11% used available credit to pay for bills and loans.

Credit utilization is an important credit score factor. It measures how much of your available credit you’re using. If rising costs has you using your credit cards more and your balances on your credit cards increase, it could raise your credit utilization ratio. This can have a negative impact on your credit score. As best you can, maintain as low a credit utilization ratio as possible and pay your bills on time each month.

If you’re receiving benefits and drawing from retirement funds, your income may be lower than it was before. This could impact your debt-to-income ratio (DTI), which is an important measure of financial health. It measures your monthly debt payments against your monthly income. It’s used by underwriters when you apply for financing for a major purchase like a home or car, or when opening a credit card account.

If you have debt and it remained the same as you entered retirement, your DTI ratio likely went up. This could impact your ability to get financing or secure more favorable terms. You may not be eligible to finance as much as you could before retirement.  If you have no debt, then your DTI would likely remain the same.

Protection from identity theft

At this stage of your finances, even if you’ve become less active with credit, consistently monitoring your credit is one of the best ways to stay on top of your credit health and prevent identity theft. You can get free weekly credit reports from the three nationwide credit reporting agencies — TransUnion, Equifax and Experian — from

When reading your credit report, be on the lookout for accounts you don’t recognize. When fraudsters get ahold of your personal information, they may try to use it to open up new credit accounts in your name.  If you spot something you think is inaccurate, you can first contact the company directly. Their contact information will be listed within the account information section. Your creditors will know more about the specifics of your account than a credit reporting agency will. If the item in question is indeed inaccurate, you can also dispute it. Read our blog post, How to Dispute Your Credit Report, to learn the steps to dispute for free.

If information on your credit report is the result of fraud, there are multiple steps you should take to help mitigate further damage and further protect yourself from identity theft. In addition to submitting a dispute, these steps include contacting the FTC, placing a credit freeze, and contacting law enforcement officials. A credit freeze is a smart choice for retirees even if you haven’t been a victim of identity theft. A credit freeze can prevent new accounts from being opened in your name. A credit freeze is free and doesn’t impact your credit score.

To keep track of your credit health, you can use your weekly credit reports to monitor your credit yourself for free. You may also consider a paid subscription to TransUnion Credit Monitoring, which automatically watches your credit reports and alerts you to critical changes.

How to identify scams

In addition to monitoring your credit, being careful with where and with whom you share personal information online can limit identity theft risks. Fraud and identity theft scams are prevalent. Older generations tend to be targeted more by fraud schemes like phishing (emails, websites, etc.), smishing (text messages) and vishing (phone calls), in which fraudsters try to trick you into revealing valuable personal information. Remaining vigilant against these schemes is paramount to protecting your personal data. Common signs of scams include:

  • A strong sense of urgency by the perpetrator
  • A request to pay with a gift card
  • An offer that is too good to be true

Scammers like to secure a payment and move on. They may say they’re from a government agency and if you don’t act now, you’ll be under threat of arrest or fines. Communications from government agencies are conducted through the mail, not by email or text message. And they certainly don’t require payment through an unorthodox method like a store gift card. If you’re ever in doubt, contact the agency or company directly with any questions.

Now that you’re retired, you might encounter Social Security scams. Fraudsters may contact you claiming they’re from the Social Security Administration (SSA) to try to get you to divulge personal information. They may even try to simply get you to send them money. The criminals may claim there is a problem with your account and threaten you with legal action. They’ll often use some of those tell-tale signs of scams above. Do not divulge any personal information over the phone or through social media pages. The SSA provides several tips to protect yourself from Social Security scams.

Just like every step in your financial journey, retirement is sure to be filled with ups and downs. With a plan in place and careful monitoring, hopefully it’s mostly ups, so you can fill your time with the things that bring you joy. For more information on how to keep your personal information safe, read our blog about 5 tips to prevent identity theft.

Disclaimer: The information posted to this blog was accurate at the time it was initially published. We do not guarantee the accuracy or completeness of the information provided. The information contained in the TransUnion blog is provided for educational purposes only and does not constitute legal or financial advice. You should consult your own attorney or financial adviser regarding your particular situation. This site is governed by the TransUnion Interactive privacy policy located here.

What You Need to Know:

The credit scores provided are based on the VantageScore® 3.0 model. Lenders use a variety of credit scores and are likely to use a credit score different from VantageScore® 3.0 to assess your creditworthiness.

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