They Had Great Credit Scores. Then They Retired.

Even people with pristine records of on-time payments can expect their scores to slip after they stop working. While stopping work or living on a fixed income don’t ding your credit directly, scaling back one’s lifestyle in retirement or paying off old loans can affect a score, said Ethan Dornhelm, vice president of scores and analytics at FICO. Credit scores matter to millions of retirees even if they are less likely to apply for mortgages, loans or other debt, financial advisers said. Scores are used in a range of insurance and healthcare decisions, from setting your premiums to whether you are accepted to an assisted-living facility.

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Average FICO scores rise as consumers get older, peaking in one’s 70s at 762, according to company data. After age 79, the average score falls to 756. As long as your score stays in the 660-780 range that most lenders consider “good,” a small postretirement drop shouldn’t affect your finances much, credit-industry executives said. A decline in score matters most to those who fall below that threshold.

Retirees typically have longer credit histories, which keep overall credit scores healthy, but closing decades-old accounts, even inactive ones, can cause a steep drop in your score. Income and employment data aren’t included in the calculation, but credit scores do reward borrowers for having a mix of different kinds of loans, which can hurt those who have already paid off mortgages and auto loans...To maintain a healthy credit score, retirees should continue to keep credit accounts active by using them regularly, Dornhelm of FICO said...

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Most seniors’ debt is tied up in mortgages, although many retirees are carrying credit-card debt, according to the National Council on Aging. The combination of lower or fixed income in retirement with higher interest rates and inflation can quickly make debt burdens unmanageable for retirees, advisers said.

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