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Though it's not always top of mind, a good credit score can make life easier even when you're not actively applying for credit. Maintaining good credit can be challenging at any age, but with a little effort, it's possible. Here's how to tackle the biggest challenges of maintaining good credit at every stage of life.
In Your 20s
Making smart moves in your 20s lays the foundations of good credit.
Challenges of Maintaining Good Credit
- If you haven't applied for much credit yet, you may have a thin credit file, meaning your credit reports with the three national consumer credit bureaus (Experian, TransUnion and Equifax) lack enough accounts for lenders to make a solid decision on whether you're a risk to lend to. You haven't yet been eligible to hold credit accounts for long enough to build a real solid credit history, which can make qualifying for new credit challenging.
- When you're new to the workforce, a lower income can make it difficult to pay your bills or qualify for certain credit products. Late or missed payments can hurt the credit score you're trying to build.
Why You Need Good Credit
A poor credit score or thin credit file can stall your journey to adulthood, making it harder to get an auto loan or credit card, open a cellphone account or rent an apartment. (Landlords often run rental credit checks looking for a history of on-time payments.)
Poor credit could even cost you a job. Employers may check a version of your credit report and turn you down if they see negative information, such as frequent late payments.
How to Improve Your Credit
- Become an authorized user on a credit card. Have a family member add you to their credit card as an authorized user and benefit from their good credit. A card with a history of on-time payments and a low balance provides the biggest boost.
- Pay bills on time. Payment history on debts, including credit cards, car loans and student loans, is the biggest factor in your credit score. Making all your payments by the due date can go a long way toward improving credit.
- Get a secured credit card. Secured credit cards require an initial deposit that the card issuer can tap if you stop paying your bill. Use the card responsibly to build credit.
- Consider a credit-builder loan. These loans put the money you borrow into a savings account that may earn interest. You make fixed monthly payments and get the money in the account, plus any interest, when the loan term ends. Your on-time payments are reported to the credit bureaus to help you build your credit. Make sure your lender reports your payment activity to all three credit bureaus.
- Diversify your credit mix. Having both installment credit (such as student loans) and revolving credit (such as credit cards) can benefit your credit score, as it shows you can manage different types of debt.
In Your 30s
The financial demands of your 30s make good credit critical.
Challenges of Maintaining Good Credit
Numerous claims on your money can make it harder to pay bills, which could hurt your credit score. You might have student loan payments, be getting married and paying for your wedding (or attending friends' weddings) and be saving for a home down payment all at the same time. Having kids is pricey too: Raising a child to age 18 costs over $310,000, the Brookings Institution estimates.
Why You Need Good Credit
- Nuptials cost an average of $30,000 in 2022, The Knot reports. You might need credit cards or a personal loan to pay for your wedding.
- Low-interest credit cards and loans can help finance everything children need—and cover expenses if parental leave is unpaid.
- Buying a house? Without good credit, you may struggle to get a mortgage, pay higher interest rates even if approved or need a cosigner.
How to Improve Your Credit
- Build a solid emergency fund to avoid using credit for unexpected expenses. Big purchases on your card could push your credit utilization ratio above 30%, hurting your credit score. Aim to keep your utilization rate below 10% for the most positive impact on your credit scores.
- Sign up for Experian Boost®ø. This free feature adds your on-time cellphone and streaming service bill payments to your credit report, which can give your credit a lift.
In Your 40s
Your 40s bring new challenges and obligations.
Challenges of Maintaining Good Credit
Financial responsibilities are probably peaking. There may be children, a mortgage and college on the horizon. Rising income could tempt you to overspend, and if you can't pay the bills, it could hurt your credit.
Why You Need Good Credit
- Better credit can help you get loans at lower interest rates, including parent student loans, to finance college. Good credit also helps you qualify for credit cards offering rewards, balance transfer options and other benefits.
- Home insurance, umbrella coverage and auto insurance for your assets are expensive (especially when teens start driving). A higher credit score may mean lower premiums.
- Want to refinance your mortgage or borrow against the equity in your home? A good credit score can help you qualify for lower-interest loans.
How to Improve Your Credit
- Use budgeting to prioritize spending and stay on top of your bills. This is especially helpful as you anticipate adding expenses to your monthly output.
- Set up autopay to prevent missing payments. Juggling all your financial obligations can be challenging, and autopay means you don't have to think about bill due dates—except to make sure you have enough money in your bank account to afford the payments.
- Control revolving debt. Excessive credit utilization can hurt your credit score. Develop a plan to eliminate high credit card balances—possibly with a personal loan or balance transfer card.
In Your 50s
Retirement on the horizon creates unique credit needs.
Challenges of Maintaining Good Credit
You may be paying college tuition or helping adult children financially. Shoring up your retirement savings might require making catch-up contributions. These expenses can stretch your budget thin and cause problems paying your bills.
Why You Need Good Credit
- Empty nesters often travel or redecorate. Good credit can help you get credit cards offering low interest rates and travel rewards.
- Want to sell your house and downsize? Planning to pay for a child's wedding? Higher credit scores can mean lower-interest mortgages and personal loans.
How to Improve Your Credit
- Watch for lifestyle creep. With the kids gone, you may splurge on dining out, travel or a new car, potentially leading to excess debt.
- Consider paying off your mortgage early. Depending on your financial situation, this could free up cash.
- Monitor credit utilization. Keep credit card balances as low as possible. Better yet, pay them off in full each month.
In Your 60s
Credit matters in your golden years too.
Challenges of Maintaining Good Credit
Income generally shrinks in retirement; you might struggle to pay bills unless you've budgeted adequately. Seniors are also vulnerable to identity theft, which can severely damage your credit.
Why You Need Good Credit
- As your income decreases, your debt-to-income ratio (DTI) rises. Lenders typically weigh both DTI and income when you apply for credit. The double whammy of lower income and higher DTI can make credit harder to obtain—and a good credit score more important than ever.
- You may want loans to remodel your home, downsize to a low-maintenance condo or pay for an expensive medical procedure. Travel rewards credit cards you can use to earn perks for retirement travel usually require good credit too.
- Credit card issuers may increase your card's annual percentage rate (APR) if your credit score drops, so carrying a balance is costlier.
How to Improve Your Credit
- Keep old credit accounts open, even if you don't use them. Age of accounts is a factor in your credit score.
- Keep credit cards active. Put a small monthly bill (like a streaming subscription) on each card and automate payments to avoid them being closed for non-use.
- Set up free credit monitoring. You'll receive alerts to changes in your credit score that can signal fraud, allowing you to act quickly and minimize the negative impact to your credit scores.
The Bottom Line
The basics of maintaining good credit are the same at any age: Pay bills on time, keep credit utilization as low as possible and minimize applications for new credit. Checking your credit score and credit report regularly will reveal potential problems before they negatively affect your credit score—and your future.