Grab RSS FeedWe can’t stop the clock, no matter how young we feel. Here are the top seven credit mistakes senior citizens make.
1. Assuming You Are Nearing the End of the RoadNow 70 is the new 50. Now the average life expectancy is 84 for men and 86 for women. Among married couples where both partners are 65, there's a 70% chance that at least one person will live to 85.
How to Fix It: If you're 65 or older, the rules are the same as when you were 25. Treat credit as a long-term asset with important risks, responsibilities and benefits.
2. Avoiding CreditMany seniors are justifiably proud of their financial accomplishments. They've paid off their mortgage, chopped up their credit cards, paid cash for their car.
But if the car dies, a financial emergency arises, or after the kids go off to college you may need or decide to sell the family home and buy something more suitable. You may need a loan. And if you foreswore credit years ago, and your credit score likely has dropped, which means you will pay more money in interest.
How to Fix It: Don't fear credit. If you don't have a credit card, get one. Use it as you would a debit card, charging only what you can afford to pay in full at the end of each month. This will help rebuild your score, hopefully in time for the next emergency or life event.
3. Taking on Too Much DebtA recent study found that Americans aged 50 and over have an average credit card balance of $8,278, compared to $6,258 for people under 50. Researchers found that elderly people are more likely than any other age group to file for bankruptcy.
Senior debt has many causes. More than a third of people over 50 with credit card debt use their cards to cover basic living expenses. Afraid to seek advice from licensed financial professionals, they may fall prey to debt collection scams or get hoodwinked into withdrawing money from their retirement accounts to pay off credit cards.
How to Fix It: Avoid taking on too much debt. If you're concerned about debts you already have and don't know what to do, find an approved credit counseling agency.
4. Student LoansMany senior citizens are drowning in student debt. Some took college classes later in life. Others have debt leftover from school days long past, or cosigned on student loans for their children and grandchildren.
How to Fix It: If you're a senior, think twice before signing for any student loan, whether for you or someone else.
5. Co-signingTo help their kids or grandkids buy a car, get a mortgage or attend college, many seniors co-sign loans. Lenders and credit reporting agencies don't distinguish between borrowers and the cosigners.
If the borrower fails to make on-time payments, the cosigner's credit score could take the same big hit.
How to Fix It: Avoid co-signing loans. Lend money directly, which won't put your credit at risk. A monetary loan or gift could help a loved one get a secured credit card and start establishing credit of their own, without endangering your financial future.
6. Failing to Check Your CreditOnly a quarter of all seniors regularly check their credit histories. Of those who do, 36% found errors, some of which were severely damaging their credit scores.
How to Fix It: Check your credit for free once a year with each of the three major credit bureaus and sign up for tools such as Credit.com's free Credit Report Card, which allows you to see your credit profile and provides free scores that update monthly.
7. Understand Reverse Mortgage RisksA reverse mortgage can provide seniors extra money during retirement by tapping all the equity they've built up in their home. The loan is repaid only when they die, sell or move out of the home
However, reverse mortgages can also be complicated, and come with risks. 70% of them take their payments in one lump sum. That could leave them with fewer financial resources to deal with moves or other future expenses. A growing number of reverse mortgage borrowers are at risk of foreclosure. Additionally, the spouse of the reverse mortgage borrower might be forced to move out of their home when the borrowing spouse dies or moves into an assisted living facility.
How to Fix It: Meet with a certified financial advisor to see whether short- or mid-term reverse mortgage is right for you
As this generation gets older, more senior baby boomers will face questions about credit. The good news is that as we lead longer, healthier lives and the same good practices that got us so far will continue to help us now. If you have debt or credit issues or for more credit information, contact Black and Buono.
Original article - Huffington Post
