In previous research, experts have found that a massive number of retirees are retiring without concrete plans on how to pay their debts off. As we are all aware of, debts can eventually lead to a bad credit score and report. Some car companies such as Road Loans, Auto Credit Express, and Alpha Finance – for our Aussie friends – offers bad credit car loan to its consumers, but still, you have to at least have some type of fallback if ever all else fails.
The main focus of retirement is to be totally stress-free and relaxed after years and years of working hard. If you are planning on retiring soon, then read on to know what you should do to get rid of bad credit as soon as possible.
Repairing Your Credit While Still Professionally Active is Easier
Fixing your credit score and report is definitely much easier while you are still working. More often than not, your income will become lower once you retire than when you were still working, which will obviously make credit repair much more difficult, if not impossible. You can always get a part-time job to make credit repair a little more possible, but hey, isn’t the point of retirement being away from work and just relaxing? To put it simply, repairing your credit score and credit report is much easier when you have a bigger income and have more money.
Insurance Rates Can be Affected
Retirees often rely heavily on insurance, since retiring means limited resources. Bad credit can affect your insurance payments, which means that you would have to pay for expensive premiums. This may include house and auto insurance. Instances such as a traffic citation or an accident can get you in trouble especially if you have poor credit. If they prove it to be your fault, then the chance of having your premium skyrocket is huge.
Downsizing Can be a Problem
As we have mentioned earlier, retiring means having limited regular income. Most retirees opt for downsizing their properties to get rid of huge and expensive bills.
Trading your current car to a cheaper one, moving into a smaller and more affordable house, and refinancing your mortgage can be some of the things that you are looking on doing before retiring. However, with poor credit, these things are not always doable. Having the highest possible credit score will definitely help you get these things done.
Turning to Line of Credit is Not a Good Idea
Emergencies are inevitable, and sometimes, you are just not prepared for it. When this happens, turning to line of credit may be your one and only option. Also, credit lines have a maximum limit, which means that when you go beyond that, there is nothing more the company can do for you. Loaning or borrowing from a credit line is as bad as having debts. How are you going to pay off your loan if you have limited income and resources? We all know that borrowing and not being able to pay for your debts can bring your credit score down, which is especially bad if you are already retired. Thus, this brings us to the conclusion that saving up before retiring is a must.
Your Assets can be Foreclosed by the Bank
If you cannot pay your debts off, chances are the bank will foreclose your properties and take hold of it. If you incurred judgments and collections on your credit report, then the possibility of the bank seizing your properties is huge. Sure, tax-sheltered retirement assets can be excused from these claims, but creditors can target your bank account or any account not related to retirement. Total income garnishment is also possible, depending on the case. Huge debts can make this possible, and of course, you do not want your savings to disappear just like that.
Saving up for retirement and paying off your debts should come hand in hand, and the best time to do this is while you are still young, able, and professionally working. There is nothing more relaxing than being debt-free, and having peace of mind during your retirement is one of the most rewarding feelings ever. Wouldn’t you love to just play with your grandkids every day and not worry about anything else?