5 Tips to Boost Your Credit Score in Retirement

December 21, 2015 — 4:30 PM EST

No one can predict with any certainty when a financial crisis will hit. It can be difficult to get through one, no matter what age or life stage you’re in, but it can be particularly hard for retirees living on a fixed income. If a spouse suddenly needs expensive surgery or you have to foot the college bill for a grandchild when your son loses his job, your nest egg may be seriously drained.

Whether or not you have the funds to cover your crisis, it’s critical to have great credit. For instance, it can help you get the lowest interest rate if you need to take out a home-equity loan. If you haven’t been paying attention to your credit score, now is the time to make sure it hasn’t dropped. Here are five ways to raise your credit score – even after you have retired.

How to Raise Your Score

The steps you need to take to raise a lagging credit score are essentially the same during retirement as they were while you are working. And without a salary to bolster your income, they are especially important.

1. Check your credit report. Your credit score is derived from information in your credit report, so you need to go over it carefully to make sure there are no errors that could be dragging down your number. You can get a free report from each of the three credit bureaus (Experian, Equifax and TransUnion) once a year; one website to use is AnnualCreditReport.com, which the bureaus sponsor. Put in a request from each bureau every four months, and you can effectively monitor your report year round for free. (For more, see Top Places to Get a Free Credit Score or Report.)

2. Pay down your debt. A portion of your score is calculated on the total amount of debt you carry, and many seniors are still burdened with hefty amounts. More than 40% of individuals between the ages of 65 and 74 are still paying off a first and even a second mortgage, according to AARP, with an average balance of $70,000.  Additionally, student loan debt is a growing issue: the Federal Reserve Bank of New York notes that 2.2 million Americans age 60 and over owe $43 billion in educational loans. In 2013, more than 150,000 seniors saw part of their Social Security checks garnished by the government for unpaid student loans, according to a CNN-Treasury Department analysis. (For more, see Seniors: Before You Co-Sign That Student Loan.)

Figure out how to pay off what you owe as quickly as possible. Pay off small amounts completely, instead of leaving several accounts with minimal balances, and avoid charging small amounts on multiple cards. It’s better for your score if you have a couple of go-to cards for all of your transactions, but pay off those charges, too, as you use the cards. (For more, see Expert Tips for Cutting Credit Card Debt.)

3. But leave paid-off debt on your record. You may be tempted to remove old, paid-off debt from your credit report, but don’t. Accounts that reveal a long history of on-time payments are good debt; they’re the ones that help pump up your score. So don’t be tempted to get that paid-off car loan removed.

4. Pay your bills on time. Making late payments is a sure way to ding your credit score. And it’s no longer just mortgages or credit card bills that are reported to the credit bureaus. More and more, nontraditional data, such as rent and utility bills, impact your FICO score. If you need reminders to keep you on track, set up automatic payments or use your bank’s electronic payment system to create alerts when bills are about to be due.

5. Use your credit cards – judiciously. Part of maintaining a great score is using your credit responsibly. That means not running up a too-high balance on your credit cards. Your aim is for a lower ratio of the debt you owe to the limit on each card – what’s known as your credit utilization ratio, also called your balance-to-limit ratio. It’s a good idea to keep the ratio no higher than 30%. Having a high credit utilization ratio is one of the factors that knocks your credit score down.

Beware of canceling a credit card as that, too, can negatively affect your utilization ratio, assuming you are carrying high balances on other cards. If you get rid of an unused card, your balance-to-limit ratio could skyrocket, which would almost certainly cause your credit score to drop. (To learn more about this important credit ratings factor, see What are the differences between balance-to-limit ratio and debt-to-income ratio?)

The Bottom Line

Having an excellent credit score can make life easier during retirement. It can help you secure a better rate on car insurance, for example, or refinance a mortgage at a lower interest rate. If your score is lower than you would like, take the steps outlined above to raise it and consider using cash more often than credit to help lower your balances.