How Important is Your Credit Score After 50?

We've all heard that a credit score can be “built over a lifetime and destroyed overnight.” But once you reach 50 and your long-term financial goals are mostly in order – let's say you have a mortgage, a 401k or an IRA, and a healthy emergency fund – how important does your credit score become?

The answer is that while your credit may not seem as important as it did when you were shopping around for your first mortgage years ago, life's full of surprises and you never know when a good credit score may be necessary after 50. 

Here's a few reasons why it's simply a good idea to maintain a solid credit score after you reach the age of 50...

Unforeseen Financial Emergencies

As most Americans are now aware of in the post-Great Recession era, the bottom can fall out on the economy seemingly overnight. It's safe to say that most of us now have our guard up when it comes to the prospect of a financial emergency, which means preparing for the worst and hoping for the best.

With that in mind, a healthy credit score well into your 50's is a valuable asset for you and your family. Mortgage refinancing, credit advances and loans are all relevant to 50-something consumers, but are hard to get done at any age with a bad credit score.

Basically, it's better to be safe than sorry when it comes to credit.

Existing Debt

50-somethings with existing debt can negotiate better interest rates if their score and credit history is still considered good-to-excellent. This is important to both the individual and their heirs in case they pass away, since assets after a person has passed are distributed to beneficiaries only after their debt has been paid off. If the debt outweighs the estate, beneficiaries aren't saddled with the old debt (unless they're a co-signer on any of these outstanding debts), but they do miss out on an inheritance.

This is all to say that an old debt never dies, but unfortunately we do. (Mordbid, I know.) And to prepare for such a situation is to take action while we still have the income, the assets and – most importantly – the time.

Paying down old debt – especially credit card debt – can take a lot of that precious commodity that we call “time”. One way to expedite this process is by negotiating lower rates with your credit card companies; another is to transfer a sizable portion of that debt to a 0 percent credit card applied to balance transfers. Simply apply for a new, 0 percent card, transfer as much of your existing debt to your new card as you see fit, and start paying it down more vigorously to remove as much of that balance as you can during the allotted 0 percent period.

While both of these options allow someone to pay down their debt at a faster rate, they're essentially reserved for good-to-excellent credit consumers. If you want lower rates, you need a good score, which is why it makes sense to maintain a healthy score well into your 50's and beyond.

The Hassle, and The Guilt

The last reason it's important to maintain solid credit and good-standing accounts is the hassle and the guilt that comes with defaulting and paying late, which are what ultimately drive down your credit scores for good.

The incessant phone calls – which you're legally entitled to stop, by the way, as part of the Fair Debt Collection Practices Act – the scary looking letters (you can stop these, too), and let's face it, the hit to your pride. None of that's worth dealing with at any age, especially when you thought your financial woes were long in your rear view mirror.

Look, it doesn't feel “good” to have bad credit and it certainly doesn't feel good to owe money. Maintaining a good credit score is what you've done all your life, so why let go just because you're unsure of it's worth in 50's and beyond?

No one can tell the future, and it's impossible to say when or how a good credit score could come in handy down the road. But it's best to be prepared if the situation arises; you'll sleep better at night in the meantime knowing you – and your family – will be in good shape in case of a credit or finance-related emergency thanks to your lifelong dedication to paying on time and carrying little to no debt.

This post was written by Jason Bushey. Jason is a personal finance expert and you can find his work daily on www.creditnet.com.

Common Credit Score Myths Debunked

Credit Scores (Photo credit: i am real estate photographer)

Ahh myths...they are fun but, when they are about financial stability, they can cause quite the stir! With credit scores being more important today than ever before, it is no surprise that myths have started to form as the result of lack of knowledge about this topic. The truth is, most schools don't teach kids about credit cards and credit scores. When it's time to fend for ourselves financially, we try to just learn as we go. In this process, we often times take suggestions offered up by friends when the truth is, they know no more about the topic than we do. Well, today, I am writing this article to debunk the most common credit score myths! 

Myth #1: Will Checking My Credit Score Harm My Credit Scores?

Over time, I've been told by several people that if I check my credit score, it will harm my credit score. The truth is, this is definitely a myth. How is it that you would be able to manage your credit if your score went down every time you went to check it! Although, this myth does have a reasonable explanation. When consumers apply for loans, their credit is checked. As a result of this check, the credit score will be decreased. However, the decreases are small and consumers would have to apply for a few loans at a time to notice any huge changes. The bottom line is, negative changes as the result of a credit check only happen if the check is requested by a third party for the purpose of issuing credit. 

Myth #2: Is Closing My Credit Card A Bad Idea?

It is a widely thought idea that closing a credit card is a bad idea. But, is this always the case? This idea is a MYTH! Although it's not always a good idea to close a credit card, it's not always necessarily a bad idea either. There are many factors that determine your credit score. One of the factors is the average amount of time your credit cards have been opened. Therefore, every time you open a new credit card, the average time goes down and it causes a minor ding. But, if you open a new credit card and find out it's not something you enjoy, it's probably a good idea to close it, considering you have other accounts that have been opened for a while. As a matter of fact, in this case, it shouldn't do the slightest bit of damage and may have a positive impact. 

Myth #3: Are Lenders Willing To Help Consumers Through Rough Times?

It is a common misconception that lenders are evil corporations that don't care about us little guys. Without us little guys, the credit card companies would have absolutely nothing. So, even if they don't care about anything but the bottom line, it's in their best interest to help us out from time to time. As a matter of fact, many lenders have opened up financial hardship departments to provide a helping hand when needed. Learn more about credit card hardship programs here in an article I recently wrote for Top Finance Blog! 

Final Thoughts

When it comes to something so incredibly important as your credit score, it's important to believe nothing you hear without research. The truth is, if you are afraid to check your credit score, it's unlikely that you will build an excellent one. If you don't understand how closing a credit card may or may not change your score, it will be hard to manage reasonable amounts of debt and lines of credit. Finally, if you are afraid to ask your lender for assistance in the midst of hard times, you will find harder times to come in most financial hardship situations. This is why doing your research is so important!

About The Author, Joshua Rodriguez

This article was written by Joshua Rodriguez, proud owner and founder of CNA Finance and avid personal finance writer. This article was inspired by Joshua's most recent work, “How Long Does It Take To Improve Your Credit Score”. Join the discussion about credit scores or any personal finance topic of your choice on Google+!

5 Tips to Restoring a Bad Credit Score

Good credit can open the door to many things, such as a nice home, a brand new vehicle, and furniture and electronics to furnish your home. It also allows you the opportunity to save money. However, bad credit keeps the door close to owning a home and saving money. Bad credit is a stain on many people’s credit reports that prevents them from obtaining many things.

Many people find themselves in a situation with bad credit due to a number of reasons, a loss of job, poorly paid jobs, lack of education, overspending, divorce, too many credit cards or debtors, health issues, etc. The list is long as to why many people find themselves in credit disarray. But there is a way to get out of the bad debt hole, and it’s by repairing your credit.

Credit repair can be a very long and complicated process that requires discipline and self-motivation. It also involves a basic and dramatic change in your spending habits. Many people can repair their credit by doing a number of things.

The first thing you can do is to obtain a copy of your credit report from the three major credit bureaus - Contact Transunion, Equifax, and Experian. Make sure you get a copy from all three of them. Often one of the bureaus will have information that the other one doesn’t. If you have recently been denied credit for whatever reason, you can obtain a free copy from each bureau. You can also sign up for a free trial with AnnualCreditRepair.com to view your credit report and credit score.

Carefully examine your credit reports for any inaccurate information. If you notice something that is not correct or current, contact the credit bureaus by mail to dispute the charges.

Contact the creditors listed on the report and try to arrange a payment plan. Most of them will work with you on a payment plan in order to pay the debt off. Many will offer a settlement, which will allow you to pay off the debt for an agreed upon amount that is a lot lower than the original debt amount. Make sure you get any settlement down in writing. Keep up your end of the settlement by setting up automatic payments. This will ensure that the exact payments are made to the creditors on-time. Before you agree to a payment plan, make sure you can make the payments.

Contact a free credit counseling credit debt management service to help you manage your bills, pay your creditors, and resolve your credit problems. Many people seek the assistance of companies like Advantage Credit Counseling Service to help them stay focus on repairing their credit and maintaining their improved credit. Advantage Credit Counseling Service offers free counseling for those who need to get out of debt.

Try changing your spending habits. Reevaluate your needs and wants. Look into downsizing to help reduce your budget. Carefully keep track of what you’re spending to see what things can be reduced or even eliminated. Focus on the long-term benefits of establishing and restoring your credit, and approach credit repair as a lifestyle change instead of a temporary fix.