En español | Having good credit is often important in today's society. But what if you're past age 50 and you've already established yourself? Does your credit standing still matter if you don't need car or student loans, a mortgage or additional credit cards?
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Most financial pros say good credit matters at any age. "You never know when the unexpected may happen in your family," warns Joe Dellutri, a certified financial planner and retirement counselor with T. Rowe Price. You may have to go back to work, help out a child or cosign a loan. These would all trigger credit inquiries.
But some say there are times when you shouldn't worry too much about blemishes to your rating — or even something as major as a foreclosure.
Many Americans — especially older ones — want to keep their credit ratings strong. Often it's not about dollars and cents so much as feelings of personal responsibility.
Jean Dorrell, a certified financial planner and head of Senior Financial Security, recalls a 66-year-old client whose husband died suddenly of cancer. "Then her dog died, she got breast cancer, both of her parents got sick, and her 87-year-old mom came to live with her," says Dorrell. "And all of this happened in just one year."
Under stress, the woman bought an expensive home that she couldn't afford. When she couldn't make her payments, she began contemplating stopping them but staying in the house pending foreclosure, but she was inclined against it because it would damage her perfect credit.
She also felt a moral responsibility to repay her debts. "She said, 'I'd feel like I'm cheating someone,' " Dorrell says.
Debt settlement misgivings
I met someone with similar apprehensions at the 2011 AARP Member Event in Los Angeles, a retired teacher struggling with $19,000 in credit card debt.
She told me she desperately wanted to be rid of those bills, but didn't want to file for bankruptcy protection or do anything to ruin her credit.
She'd been counseled by a financial services representative to try debt settlement, a process in which you don't pay your bills for three to six months, and then try to negotiate a lump sum settlement with creditors, hopefully for pennies on the dollar.
When I advised the woman against debt settlement, she was relieved, even though it meant she'd still have debt.
"I haven't missed a payment in more than 20 years," she told me. She was reluctant to start now.
In Dorrell's view, if you're over age 50 and you "have enough savings and wouldn't need a credit card to deal with an emergency," you don't need to worry much about your credit. And if you miss bills, there are some circumstances in which you'll normally feel no impact on your score.
For example, if you have large medical bills that you simply can't pay, Dorrell says, "I wouldn't worry about that one bit. Those are not going to affect your credit rating." That's because medical bills aren't reported on your reports at the three major credit bureaus: TransUnion, Experian and Equifax.