You’re fully debt-free. No mortgage. No automotive funds. No scholar loans. Does your credit score rating even matter?

But that doesn’t imply it’s irrelevant.

“People with no debt don’t have to worry too much about their credit score,” stated Rob Schultz, a licensed monetary planner in Encino, Calif. “But other institutions may use their credit score, so it can still be important.”

Consider what occurs if you purchase auto, dwelling or another sort of insurance coverage. Insurers will quote a value primarily based on a spread of things, usually together with your credit standing.

Applicants with glorious credit score might qualify for decrease charges, particularly for automotive insurance coverage. Conversely, drivers with poor credit score pay $144 a month extra for full protection than these with good credit score, on common.

Just since you’re a house owner with no mortgage doesn’t imply you received’t transfer sooner or later. If you resolve to lease, a landlord might run a credit score verify.

“And if you sign up for any utility or new cell-phone contract, they’re going to run your credit,” Schultz added. “You’re not technically taking out a loan, but it could be a factor in whether you’re approved for the product or policy.”

Once you retire, chances are you’ll determine you’re executed working for pay. But many retirees re-enter the workforce for quite a lot of causes. If you apply for a job, employers may ask your permission to run a credit score verify on you.

“While a poor credit score is unlikely to disqualify you from a job, it’s certainly a possibility if you are applying for a job involving financial responsibilities and access to sensitive information like banking,” stated Carla Adams, a licensed monetary planner in Lake Orion, Mich.

Expats too might determine they now not want to fret about their credit score rating after they relocate overseas. But in the event that they return to the U.S., their lack of credit score exercise can go away them with no credit score rating. As a end result, their credit score historical past will ultimately disappear.

“That can leave them in a difficult situation,” stated Rod Griffin, senior director of shopper training and advocacy at Experian, a credit-reporting firm. “Banks will want to see your credit history to verify your identity and open an account,” whereas renting an residence additionally turns into tougher.

Some shoppers may elect to finance their subsequent automotive buy even when they’ve ample money available to pay in full. Economic circumstances (reminiscent of inflation and rates of interest), together with market swings, can have an effect on their determination.

“I had clients in their late 60s who had no debt and always paid cash for their vehicles,” stated Crystal Cox, a licensed monetary planner in Madison, Wis. “In 2020, one of their cars needed to be replaced when the market was way down.” Instead of tapping their funding account to entry funds to purchase the automotive, the purchasers sought a mortgage as a result of they didn’t need to “sell low.” Their good credit score rating enabled them to finance the car and go away their portfolio untouched as markets recovered.

The risk of id theft raises one other concern. As cyberhacks proliferate, it’s vital for everybody — together with the debt-free — to watch their credit score.

If you discover an enormous drop in your credit score rating, it may point out a fraudster has opened accounts in your identify and left a path of unpaid payments. “Keep an eye on your credit report for new accounts that you didn’t open and hard inquiries you didn’t authorize,” Cox famous.

Also learn: Credit-card rates of interest have been hitting report highs, however they could have simply peaked

Plus: Overdraft charges may shrink to as little as $3 underneath Biden administration proposal