Should you worry about your credit score in retirement?

Should you worry about your credit score in retirement?

Dubai: Retiring early isn’t supposed to directly impact your credit score, nor should it affect your long-standing credit history due to the sudden absence of an income or employment status. But in reality, a few changes to your lifestyle or fiscal decisions can led to certain implications. Here’s how. “Presuming you’re able to manage your bills and budget after leaving the workforce, you should be able to maintain a good credit score,” said Melanie Aguste, a financial planner based in Abu Dhabi. “But while retiring won’t directly hurt your credit score, it could impact your ability to borrow. “This is because your income is likely lower in retirement than it was while you were working. When lenders evaluate borrowers, they look at several factors including your ‘debt-to-income’ ratio. This helps them decide if your income will be enough to pay back what you are borrowing.” Aguste further explained that if you have outstanding debt and are receiving a smaller amount of income in retirement, your debt to income ratio will be much smaller than it was before leaving the workforce. This can further affect your borrowing power. “Retirees commonly assume once they retire that their borrowing days are over. However,