Get an education, put in a solid 40+ years of labor, and then enjoy your remaining days of retirement. Many Baby Boomers were raised with that as their guiding principle, but things aren’t quite that simple today. Hard work doesn’t always translate into a sizable 401(k), and having terrible credit can result in extremely high interest rates on your maxed-out credit cards.
Your ability to finance your retirement goals, whether they be an international vacation or a second property on the beach, will be hampered by your limited financial resources and subpar credit score.
Since the average credit score of Baby Boomers is 654 according to our statistics, more than one-third of Credit Sesame readers wish to raise their score. Not an awful score, but it is only a little bit over the minimum required for a good credit score.
Obtaining a free copy of their credit report card and checking it for mistakes is one way that many customers can raise their credit scores. Of course, not every report has errors, but you should review it just to be safe. It is improper for a debt that is not even your responsibility or an old obligation that was settled decades ago to be on your report and have a negative impact on your ability to obtain favorable terms when you need to borrow money.
Even if you diligently check your credit reports three times a year, you could still be the victim of another credit error that makes it difficult for you to obtain the mortgage you need for the beach house or expensive sports vehicle of your dreams. Your credit score may be at risk if you carry out one or more of the following:
1. Using excessive credit
The average Baby Boomer has six credit cards, according to reader data from Credit Sesame. Six is not a large amount if you take into account that three of them are store cards, while the other three might be ordinary credit cards. The more credit cards you have, though, the more likely it is that you will have a high debt-to-credit ratio or too much available credit, which could lower your credit score.
Close off the Sears credit card that you opened solely to receive the additional discount on your living room furnishings since shop credit cards are typically a smart option when you need to cut up one or two cards.
2. Co-signing for a child who is an adult
When your kid asks you to cosign for his new auto loan, you can be confident that he doesn’t have very good credit and that you may end up paying the bill in a few months or years. Banks only ask for cosigners when they believe the loan applicant can’t pay. You might want to assist him, but resist the urge. He will quickly realize that an old car would do just fine for him to move around because he can’t afford a new one that costs $30,000 because he is an adult.
Now, if you have the means and the desire, you may give him some money to aid with the purchase. However, there is no justification for jeopardizing your own financial standing and credit score by taking part in someone else’s financial irresponsibility.
3. Assuming student loan debt
Credit The average Baby Boomer has $32,180 in student loan debt, whether it is their own or debt they have incurred for their offspring or grandchildren. You should think very carefully before taking out a student loan, regardless of whether you’re considering going back to school to finish your degree, to prepare for a second job, or because your child has his or her sights set on a higher education.
If you want to stay with your existing employer, ask them if they will cover the cost. Alternatively, look into local organizations that can provide tuition aid for non-traditional students. Finally, think about getting a part-time work to help you finance your degree after completing the FAFSA to locate more free money for college. Encourage your child to submit the FAFSA, submit applications for every scholarships they can discover, and work during the holidays.
Avoid these blunders to protect your nest egg and give yourself the most pleasant retirement possible, regardless of where you are in the retirement process or whether you’ve already reached it.