Just because you're retired, doesn't mean you should stop caring about your credit.
Just because you're retired, doesn't mean you should stop caring about your credit.

Maintaining a good credit score is a top priority for many Americans – as it should be. It affects your ability to take out a mortgage, open a line of credit, or in some cases get a job. For those who have fallen behind on their credit score, retirement might be less comfortable than they originally envisioned. Just because your borrowing days are behind you, doesn’t mean that your credit score is no longer relevant.

If you have poor credit, you’re not alone. According to a recent study, a third of Americans have credit scores below 601, the difference between bad and fair credit.

Even if you’ve already purchased a home, your credit score still determines whether or not you can refinance to take advantage of lower interest rates. Over time, refinancing can save you a lot of money over the life of the loan since you’re paying less interest, meaning that your monthly payments will be lower.

Refinancing with poor credit can prove immensely difficult, if not impossible. Lenders check your credit score to determine whether or not you’re eligible. Your credit score is determined by your payment history (35%), amount owed (30%), length of your credit history (15%), new credit (10%), and type of credit (10%). While certain behaviors affect your credit score more than others, the only way to be sure is to be diligent about staying on top of your debt.

Even if you own your home outright, there are other reasons why you will want to avoid a bad credit score in retirement. Although retirees might not be as dependent upon credit cards as their younger counterparts, there are several specific credit cards that will actually save you money.

Like to travel? Some cards allow you to accumulate points on airfare, hotel stays, gas, and even restaurant meals. Need to go shopping? Many credit cards provide cash back on purchases from stores like Home Depot, Target, and more. Poor credit means that you are less likely to be eligible for these credit cards, essentially locking you out from taking advantage of the savings they provide more eligible candidates.

In other words, credit cards can be used as a way to leverage your purchasing habits to save you money in the long run, rather than just another way to accumulate debt. NerdWallet lets you search by rewards categories so you can find the perfect credit card to match your interests.

Having poor credit can also affect your ability to shop for insurance. Even if you’re already happy with your insurance, you should still poke around every year or so to see what else is out there. Having poor credit limits your options when it comes to switching plans and lowering your premiums. Not only does bad credit prevent you from being eligible for a more beneficial insurance plan, but also stops you from being in the enviable position of being able to negotiate with insurance brokers.

Having an open and healthy line of credit also comes as a great relief for an emergency fund when the cash just simply isn’t available. Having poor credit severely limits your options if your water heater suddenly breaks, the car breaks down, or your roof gets a leak. Being in a position to gain a credit line is a lifesaver when you are hit with a large, unexpected expense.

Having poor credit can also effect your dream retirement, whether you have a healthy retirement fund or not. Recent trends suggest that retirees are opting to start their own business. In fact, a recent study found that people aged 55 to 64 accounted for 25.8% of all the businesses started in the last year.

Although many businesses can be started with minimal capital (especially if you avoid a brick-and-mortar business), for many it will require a line of credit in order to get started quickly. Having poor credit not only puts you in a precarious position regarding your personal finances, but it can also curtail your retirement dream of having your own business.

Not sure where you stand credit-wise? Thankfully there are plentiful online resources to get your credit score. The three major credit-reporting agencies are required by federal law to provide you with a free report every year. Visit annualcreditreport.comCredit Karma, or WalletHub to see where you stand so you can plan for your perfect retirement today.

Don’t like what you see? Bankrate provides some helpful tips for getting your credit back on track.