16-May-2018 written by : FSI-Team
Financially conscientious individuals are aware of the fact that it is important to have a good credit score in order to get a fresh line of credit. However, usage of credit facilities is usually associated with young and middle aged adults. This is why, there is a misconception that if you are an adult above 50 years of age or a senior citizen, your credit score may not as important.
The truth however is that seniors too need to make a steady effort to improve CIBIL score as it is indeed a second phase of their life, that may not be free of twists and turns. Let us take a look at why senior citizens too should continue to maintain a good credit record.
It is expected that as senior citizen, you are adequately covered under a health plan and are financially prepared for any medical emergency. But a sudden medical emergency and its associated costs may overthrow the best financial plan. In such a case, your health insurance may not suffice and you may be required to avail of an extra line of credit by way of a personal loan. A poor score at such times will work against you and diminish your chances of getting a loan. Even if you do get one, you may be required to pay a high rate of interest on the same.
A financial emergency may not strike you personally as a senior citizen, but what if an adult child of yours is in dire need of finances and you have the opportunity to help him or her out. In situations like this, you may be able to procure a loan at a better rate of interest to help out a family member. This will be possible, if you have made an effort to increase credit score and kept your credit records blemish free.
Many seniors who have spent a bulk of their lives working, find it difficult to retire without any job at hand after the official age of retirement at one's workplace. However, keeping the rich experiences that seniors have, many corporates are now offering consultancy jobs to senior citizens. If you wish to explore such an opportunity, a good credit report may add another feather to your cap apart from your experience.
These days, many companies prefer to check the CIBIL records of an individual, and you may be asked to submit a copy of your CIBIL report along with you official application. You can access free CIBIL report and free CIBIL score annually, a facility that CIBIL, India's premiere credit bureau provides, when a potential employer asks you to submit your CIBIL records. If your CIBIL score has been high, it is indicative of the fact that your are a responsible individual and can be trusted with workplace responsibilities.
Maintenance of credit records is no different for seniors as compared to younger adults. Here are some basic financial do's and don'ts for you to maintain your credit score:
As a senior, you may feel that keeping track of your credit report is no longer important. This is however a misconception. It is important for you to keep a periodic watch over your credit score. It is now easier to do so by accessing one free CIBIL score in a year.
It is likely that you no longer have a home loan or a vehicle loan that you are still paying off in your golden years. However, it is likely that you are still using credit cards. Even if it is small amounts you are spending on your credit card each month, make sure that you make repayments in full each billing cycle. Automating your payments on your credit cards is the easiest way to maintain financial discipline.
Finally, and most importantly, do not make the mistake of closing old credit accounts (old credit cards) even if they are not in use. Old credit cards add to the age of your account as well as keep your credit utilisation low (Credit utilisation is the amount of credit you use as against the total credit made available to you. Ideally credit utilisation should not exceed 30%). Both of these factors serve to keep your CIBIL score high. Once you have repaid in full, you can simply lock your old cards away. This way, you keep the age of your account long and keep your credit utilisation low.